+0  
 
0
48
1
avatar

Hello good people: I'm having difficulty getting the right answer for i in the following equation. I get a different answer every time! Please help so I can see where I went wrong. Thank you very much.
-5,000 * ((1 - (1 + i)^-40) / i) + 1,307,997.74 * ((1 + i)^-40) - 100,000 =0, solve for i

Guest Jul 29, 2018
 #1
avatar
0

Well, young person!! The reason you are getting different answers is because there is NO DIRECT solution to your equation!!. I can readily see that this a combined financial equation for a future value of $1,307,997.74, a present value of $100,000, a periodic payment of $5,000 and 40 periods, which appear to be "years". You can only solve for "i" using iteration, or trial and error method. You can easily solve it by using a dedicated financial calculator, if you have one. 

Go online and use this financial calculator: https://arachnoid.com/finance/

 

1- Enter $100,000 as negative under "pv"

2- Enter $5,000 as negative under "pmt"

3-Enter 40 under "np"

4- Try any interest rate and enter it under "ir"

5- Press "fv" and compare the amount to your $1,307,997.74

6- Change the interest rate in "4" above until you get as close as possible to "fv" of $1,307,997.74.

Note: I tried it on your behalf and got 5%, which gives the exact "fv" of $1,307,997.74 !!!.

Guest Jul 29, 2018

11 Online Users

New Privacy Policy

We use cookies to personalise content and advertisements and to analyse access to our website. Furthermore, our partners for online advertising receive information about your use of our website.
For more information: our cookie policy and privacy policy.