Compound Interest Using a TVM Solver:

You may be faced with a real-world scenario involving compound interest where you will need to determine an interest rate (i) or time (n).

To do this, you can use an Online app called a TVM solver. An example of such an app can be found here: (Grunder Ware). Visit this land use the calculator to work through the following activity

PART A Solving for i

1. Read the following problem: Gabriella hopes the $26000 she is investing will be worth $40000 in 5 years to upgrade the computers for her business. What rate of interest, to the nearest hundredth of a per cent, compounded quarterly, would Gabriella need to achieve this goal?

2. Use the TVM solver to determine the rate of interest. Write it here: ________

3. Check your answer by substitution.

4. Confirm your rate of interest by solving for the interest rate by hand (think back to our lesson on Rational Exponents for clues).

PART B Solving for n

1. Read the following problem: How long would it take for a $15000 investment to double if it earns 10%/a interest compounded semi-annually?

2. In the space below, try to solve this problem algebraically.

What have you noticed in your attempt at solving algebraically?

3. Use the TVM solver to solve the problem. Write your answer here: _________

4. Check your answer by substitution.

PART C Real-World Scenario

1. Write an example of real-world scenario you might face in your life that you could use the TVM calculator to solve. Write your example in the space below. Solve your problem and check your answer by substitution.