How would you guys solve this? Algebraically
John needs $100,000 in 5 years to begin his business. He has already $30,200 saved toward this goal. If John plans to make regularly recurring quarterly deposits of $2,250 starting today, what annual rate of return must John earn to accomplish his goal?
Saw this in a tutorial to use the HP 12C (I just got one) and this was the sample question made me wonder how the calculator solves for interest rate.
I’d find interest rate as follow 100,000 = FV of lump sum (30,200) + FV of annuity (2250). Curious if anyone got a different answer.
AI Tutor said this:
Yeah the original source also gave 7.76% or 1.93% quarterly. But I don’t think it’s correct. Because they don’t factor in for the fact that the 30,200 can grow overtime as well. Which baffles me
So yeah it would just now be (so easy lol):
69,800 = FV of 2250 a quarter (find for r)
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