TVM16b - Future Value of a Single Sum - Unknown Interest Rate

Assume that Marilyn wants to accumulate $1 million in 18 years, using her investment fund balance of $250,000. At what interest rate must Marilyn’s investment compound annually?

First, we enter the variables.

PV is $250,000.

NPER, number of periods is 18. FV, the future value, is -$1 million.

The unknown here is the rate.

Going the Formulas tab, we look for the rate function.

We click on PV,

we click on NPER,

We click on FV.

Click OK.

And the rate is 8.01%.

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