Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 6 - Accounting and the Time Value of Money - Exercises - Page 344: E6-9

Answer

11%

Work Step by Step

The rate of interest is calculated by dividing the future value by the present value and then looking for the factor in the FVF table with n = 2 that approximates that number: $118,810 = $100,000 (FVF2, i%) $118,810 รท $100,000 = (FVF2, i%) 1.1881 = (FVF2, i%) Using the future value tables and reading across the n = 2 row reveals that i = 11%.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.