Morgan's initial investment was $50,000. After 20 years, it becomes $130,000. The interest rate is 4.9%
Assuming the compound interest, the formula for the future value is:
FV = PV (1 + r)ⁿ
Where:
PV = present value
r = interest rate
n = number of periods
Parameters given in the problem:
FV = $130,000
PV = $50,000
n = 20
Plug these parameters into the problem:
130,000 = 50,000 (1 + r)²⁰
(1 + r)²⁰ = 2.6
1 + r = 1.049
r = 1.049 - 1 = 0.049 = 4.9%
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