I've been asked to comment on problem 2.3.8, in which you are asked to find the rate of return required for an investment of $2000 per year to grow to $1,000,000 over the course of 40 years. To complete this problem, as noted by commenter "anonymous" to this post, you must solve an equation of the form (e^(rt)-1)/r=[constant].
I didn't remark on this earlier, because I though commenter Jeffrey addresses the situation adequately. You will have to find some way to solve this numerically. If your calculator has a "solver" you can use that. Another method would be to graph the function f(r)=(e^(rt)-1)/r-[constant] and determine (by inspection) where it crosses the x-axis. Newton's method could, in principle, be employed, but it gets unwieldy rather quickly.
No comments:
Post a Comment