Find the interest rate implied by the following combinations of present and future values: (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to the nearest whole percent.)
Present Value Years Future Value Interest Rate
$ 400 11 $ 684 %
183 4 249 %
300 7 300 %
1. 5%
2. 8%
3. 0%
Explanation:
Computing the interest rate of the following by applying the Rate formula in the excel, which is as:
=Rate(nper,pmt,pv,fv,type)
where
nper is number of years
pmt is monthly payment
pv is present value
fv is future value
type will be 0
So, in case of 1
1. The rate is computed as:
=Rate(nper,pmt,pv,fv, type)
where
nper is 11
pmt is 0
pv is -$400
fv is $684
type is 0
Putting the values above:
=Rate(11,0,-400,684,0)
= 5%
2. The rate is computed as:
=Rate(nper,pmt,pv,fv, type)
where
nper is 4
pmt is 0
pv is -$183
fv is $249
type is 0
Putting the values above:
=Rate(4,0,-183,249,0)
= 8%
3. The rate is computed as:
=Rate(nper,pmt,pv,fv, type)
where
nper is 7
pmt is 0
pv is -$300
fv is $300
type is 0
Putting the values above:
=Rate(7,0,-300,300,0)
= 0%
commercial banking
provide online payment services
provide online banking
asset management firms
invest in people's funds in securities
accept tax return refunds