How do you calculate the percentage increase in value per year of something $350 to $800 in 7 years?

1 Answer
May 8, 2018

Answer:

#12.54%# per year.

Explanation:

We could use the formula for compound interest.

#FV=PV(1+r/n)^(nt)#

Where:

FV = future value.

PV = present value.

#r=# interest rate given as a decimal.

#n=# number of compounds per year.

#t=# number of years.

We have:

#PV = 350#

#FV=800#

We will assume that this is compounded annually.

#350(1+r/1)^7=800#

#(1+r/1)^7=800/350=16/7#

#r=root(7)(16/7)-1~~0.125353197#

This is in decimal form, so.

#12.54%# per year. 2 d.p.