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2000 Euros invested in year 2001 becomes 64000 Euros in the

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sunniboy007
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2000 Euros invested in year 2001 becomes 64000 Euros in the [#permalink] New post   12 Jan 2004, 14:06
2000 Euros invested in year 2001 becomes 64000 Euros in the year 2021. If the amount earned compoun interest during this period, interest being compounded annually, what was the approximate rate of interest in which it was invested?

a. 11%
b. 16%
c. 18%
d. 20%
e. 22%



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Re: 2000 Euros invested in year 2001 becomes 64000 Euros in the [#permalink] New post   12 Jan 2004, 14:30
Definitely know the answer from a financial calculator but it is not clear to me how to get the approximation without it...
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Re: 2000 Euros invested in year 2001 becomes 64000 Euros in the [#permalink] New post   12 Jan 2004, 14:41
Answer is C, although I reached a point in which I just had to use the calculator. Maybe someone can pick it up from there

2000*(1+r)^21=64000

(1+r)^21=32=2^5

[(1+r)^21]^(1/5)=2

approx. (1+r)^4=2

since 2^(1/2)=1.4 approx. then (1+r)(1+r)=1.4

I had to use the calc here... :cry:
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Re: 2000 Euros invested in year 2001 becomes 64000 Euros in the [#permalink] New post   12 Jan 2004, 14:41
2000 Euros invested in year 2001 becomes 64000 Euros in the year 2021. If the amount earned compoun interest during this period, interest being compounded annually, what was the approximate rate of interest in which it was invested?

- Period of investment is 20 years.
- From E2000 to E64000 we can see that the investment has appreciated 32 times.
- If n is the years it takes to double, we know that the amount has appreciated 32 times, therefore it must have doubled 5 times. So, 5n
if 5n=20 , n = 4years.

Using either the rule of 72 or 69

72/4 = app 18%



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Re: 2000 Euros invested in year 2001 becomes 64000 Euros in the [#permalink]
12 Jan 2004, 14:41
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