Question

Sixty years ago, your mother invested $3,800. Today, that investment is worth $430,065.11. What is the average annual rate of return she earned on this investment

Answer 1

Answer:

8.2%

Explanation:

As we know that:

r = (Future Value / Present Value)^(1/Time)   - 1

Here

Future Value is $430,065.11

Present Value is $3,800

Time is 60 years

By putting values, we have:

r = ($430,065.11 / $3,800)^(1/60)   - 1

r = (113.16)^(1/60)   - 1

r = 1.082 - 1 = 8.2%