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Find the percentage rate

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  1. Oct 9, 2015 #1
    1. The problem statement, all variables and given/known data
    If an investment increased by 40% over 3 years and rose by the same percentage rate each of those years, what was the rate?

    2. Relevant equations
    new_value = old_value(1+r)^p

    3. The attempt at a solution
    Let value of the investment be 1000, then we have 1000(1+0.4) = 1000(1+r)^3, r = 0.1187

    r seems reasonable to me, but I am not sure that is right.
     
  2. jcsd
  3. Oct 9, 2015 #2

    SammyS

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    What is (1+r)3 for the rate you found?
     
  4. Oct 9, 2015 #3
    the investment is increasing at the same rate in 3 years, and we are looking for the rate,r. In order to get the value after 3 years which is already increase 40%, I think (1+r)^3 is the rate increase over 4 years. Thus, this would equal to 1+0.4
     
  5. Oct 10, 2015 #4

    SammyS

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    You did get a value for r, Right?

    Simple question:

    With that value of r, what do you get for (1+r}3 ?
     
  6. Oct 10, 2015 #5
    I get 1.4
     
  7. Oct 10, 2015 #6

    SammyS

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    That corresponds to an increase of 40% .
     
  8. Oct 10, 2015 #7
    I am getting confusing about the question, the investment increased 0.4 in 3 years, and in this 3 years increasing by the same rate, that is how I understand the question.
     
  9. Oct 10, 2015 #8

    SammyS

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    At the end of three years, the investment should have increased by 40%.

    You were to find the yearly rate necessary for that growth.

    Checking your answer, it seems the % you found is correct.
     
  10. Oct 10, 2015 #9
    Thank you for checking my answer and help me to understand the question in more detail
     
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