What is (1+r)3 for the rate you found?HaLAA said:Homework Statement
If an investment increased by 40% over 3 years and rose by the same percentage rate each of those years, what was the rate?
Homework Equations
new_value = old_value(1+r)^p
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.
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+0.4SammyS said:What is (1+r)3 for the rate you found?
You did get a value for r, Right?HaLAA said: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
I get 1.4SammyS said:You did get a value for r, Right?
Simple question:
With that value of r, what do you get for (1+r}3 ?
That corresponds to an increase of 40% .HaLAA said:I get 1.4
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.SammyS said:That corresponds to an increase of 40% .
At the end of three years, the investment should have increased by 40%.HaLAA said: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.
Thank you for checking my answer and help me to understand the question in more detailSammyS said: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.
"Find the percentage rate" refers to the calculation of a percentage based on a given number or value. It is often used in finance and economics to determine interest rates, growth rates, and other important metrics.
The percentage rate can be found by dividing the value of interest by the total amount and multiplying by 100. For example, if you want to find the interest rate on a loan of $100 with an interest of $10, you would divide $10 by $100 and multiply by 100 to get a percentage rate of 10%.
Finding the percentage rate is important because it allows you to understand the growth or decline of a value over time. It is also important in budgeting and financial planning as it helps determine the cost of borrowing money or the return on investment.
Yes, the percentage rate can change over time. It can increase or decrease depending on various factors such as market conditions, inflation, and economic policies. It is important to regularly review the percentage rate to stay informed and make informed financial decisions.
The percentage rate can be used in various aspects of daily life, such as calculating interest on loans or credit cards, determining the return on investments, and understanding the impact of inflation on prices. It can also help in budgeting and making financial decisions based on the cost of borrowing or earning interest.