solving for i: p=a[{((1+i)^n)-1}/i((1+i)^n)]

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vcantu04

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I need to solve for "i" in the following equation:

p = a[{((1 + i)^n) - 1} / i((1 + i)^n)]

I got:

e^(ln(p/a)/n) - 1 = i

The equation came up in the context of this exercise: "1000 are deposit in a savnigs account and 200 are withdrawn each yr for 10 yrs. What should be the interest so at the end of the 10 yrs the balance is 0?"

I am using the annuity formua. The answer should be "i = 15.11".
 
If you managed to solve it for 'i', you are either magic or something went wrong. You cannot solve it for 'i'. Finding 'i' is a numeric process.

Where does than leave you?

Note: I get 15.09841448% -- It CAN be done, but not by the exercise of algebra alone.
 
ok, maybe I did something wrong, since your answer is pretty close to the one on the book could yo explain me the steps to get it. I am having an exam next week and probably I will get a similar problem so I would like to know how to solve it.

Is it a matter of trial an error while mathching the LHS and RHS?
 
thanks for the help, finally I manged to solve the problem by trial and error.
 
Actually, the book's answer is close to mine. :wink:

I like to call it "Iterative Methods" rather than "trial and error". There are ways to guess with greater accuracy than simply throwing darts.
 
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