- 1). Divide the ending investment value by the amount you have to start with. For example, if you start with $8,300 and need it to grow to $14,000 in six years, divide $14,000 by $8,300 to get 1.686746988.
- 2). Divide 1 by the number of years the investment can grow. In this example, divide 1 by 6 to get 0.166666667.
- 3). Figure the Step 1 result raised to the power of Step 2. You can do this on a calculator using the exponent key, usually denoted by "^" or "x^y." In this example, raise 1.686746988 to the 0.166666667 power to get 1.091042472.
- 4). Take away 1 from the answer to find the annual interest rate expressed as a decimal. In this example, take off 1 from 1.091042472 to get 0.091042472.
- 5). Multiply the result by 100 to find the average annual interest rate. In this example, multiply 0.091042472 by 100, which lets you know that you need an average annual interest rate of about 9.1 percent.
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