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Homework answers / question archive / George Robinson has $3,000 to invest
George Robinson has $3,000 to invest. His brother approached him with an investment opportunity that could double his money in 4 years. What interest rate would the investment have to yield in order for George's brother to deliver on his promise?
We can calculate the interest rate by using the following formula in excel:-
=rate(nper,pmt,-pv,fv)
Here,
Rate = Interest rate
Nper = 4 periods
Pmt = 0
PV = $3,000
FV = $3,000*2 = $6,000
Substituting the values in formula:
= rate(4,0,-3000,6000)
= 18.92%
