Answer: 33.3333333% interest rate must be earned for the firm to have $20,000,000
Explanation:
Mining firm annual deposit
= $500,000
The next 30 years, the deposit will be $500,000×30=$15,000,000
Amount the mining firm must have when closed = $20,000,000
Interest rate (%) =
(current amount - past amount) / past amount × 100
Current amount = the amount the firm must have when the mine is closed = $20,000,000
Past amount = deposit of the mining firm for 30years = $15,000,000
Interest rate = $20,000,000-$15,000,000/$15,000,000 ×100
$5,000,000/$15,000,000 ×100
1/3 × 100 = 33.3333333%
Therefore,
33.3333333% interest rate must be earned by the mining firm to get an amount of $20,000,000 when the mine is closed.
