You have been told that you need $21,600 today in order to have $100,000 when you retire 42 years from now. what rate of interest was used in the present value computation? assume interest is compounded annually.

You will have to use this formula:
log(1 + rate) = {log(total) -log(Principal)} ÷ Years
log(1 + rate) = {log(100,000) -log(21,600)} ÷ Years
log(1 + rate) = { 5 -4.3344537512} / Years
log(1 + rate) = { 0.6655462488} / 42
log(1 + rate) = 0.0158463393
1 + rate = 10^ 0.015846339
1 + rate = 1.0371613856
rate = .0371613856
rate = 3.71613856%


Double-Check
Total = principal * (1 +rate)^years
Total = 21,600 * (1.0371613856)^42
Total = 21,600 *  4.6296296291  
Total = 100,000

Correct !!

What are the options