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Re: Help resolving the following equation...


From: Stefan Neumann
Subject: Re: Help resolving the following equation...
Date: Tue, 16 Mar 2010 17:48:17 +0100



2010/3/16 Julien Martin <address@hidden>
Hello,
I am trying to determine an interest rate by solving the following equation:
fsolve(@(r) 200*(1+r)^(4)+300*(1+r)^(3)+400*(1+r)^(2)+500*(1+r)^(1)-1000,0)
What really puzzles me is that Octave will not give me a solution that makes sense: it gives me a negative interest rate!!
In plain English, the problem is as follows: one invests 1000$ at year 1, and receives 200 at year 2, 300 at year 3, 400 at year 4 and 500 at year 5.
I have to find out the interest rate of this investment...
Can anyone please help?
Thanks in advance,
Julien.

You calculated:
Save 200 for 4 years
save 300 for 3 years
save 400 for 2 years
save 500 for 1 year
In the end have 1000 on your account.
If you put in 1400 and get 1000 in the end, you lose. That is why your interest is negative.

stn
 

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