Your godmother put $2,000 in a trust fund for you. In 10 years the fund will be worth $5,000. What is the rate of return on the

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Your godmother put $2,000 in a trust fund for you. In 10 years the fund will be worth $5,000. What is the rate of return on the

trust fund?

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1 answer:

damaskus [11] · Answer 1 · 2023-08-09T16:55:32+03:00

Your godmother put $2,000 in a trust fund for you. In 10 years the fund will be worth $5,000. 9.60% is the rate of return on the trust fund.

FV = Future Value

PV = Present Value

r = rate of interest

n= no of period

FV/ PV = (1 + r )^n

5000/2000 = (1 + r%)^10

2.5 = (1 + r%)^10

r = 9.60%.

The rate of return is the net profit or loss of an investment over a period of time, expressed as a percentage of the original cost of the investment. 1 When calculating the rate of return, find the percentage change from the beginning of the period to the end of the period.

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