What's the interest rate if the principal is $6000, the balance is $43,257.41 and the time is 20 years and compound quarterly?
The interest rate is 10% compounded quarterly. You use this common TVM formula to find the rate:
FV=PV[1 + R]^N
43,257.41=6,000[1+R/4]^(20*4) you would use logs to find the interest rate.
R=2.50% per quarter x 4 =10% comp. quarterly.
43,257.41=6,000[1+R/4]^(20*4) divide both sides by 6000.
7.2095683=[1 + r]^80 take the log of both sides.
Log(1+r)=10^0.010723865
1+r=1.025
r=1.025 - 1
r=.025 x 100
r=2.50%