1. PF Contest - Win "Conquering the Physics GRE" book! Click Here to Enter
    Dismiss Notice
Dismiss Notice
Join Physics Forums Today!
The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

Rate of return with logs [engineering economics]

  1. Sep 11, 2010 #1
    1. The problem statement, all variables and given/known data

    In 1903, a Picasso painting was purchased for $600. The family of the original owner sold the painting in 1995 for $29,152,000. What rate of return (interest) did the family receive on the investment?

    2. Relevant equations

    Single Payment Compound Interest Formula:

    F = P(1+i)n


    F= a future some of money (future value)
    P= a present sum of money
    n= number of interest periods
    i = interest rate per interest period.

    3. The attempt at a solution

    solve for i:

    F = P(1+i)n
    F/P = (1+i)n
    log(F/P) = n log (1+i)

    This is as far as I get. I know that n log (1+i) does not equal n log 1 + n log i, but I don't know what to do to isolate the i. I can't just divide both sides by n log because there is no such thing as n log. I thought about moving n log (1+i) to the left side and setting the equation to zero, but I didn't get anywhere with that either.
  2. jcsd
  3. Sep 11, 2010 #2


    User Avatar
    Gold Member

    Think about how you would invert a logarithmic function:

    [tex]y = \log x \Leftrightarrow x = {10^y}[/tex]
  4. Sep 11, 2010 #3
    get rid of the power of n by raising both sides by 1/n. i don't think that log trick you're pulling is even accurate
Know someone interested in this topic? Share this thread via Reddit, Google+, Twitter, or Facebook