Answer:
5.70%
Step-by-step explanation:
Correct word <em>"We turned a $25,000 investment of money in 1982 into $100,000 in 2007." What return (interest rate) did they really earn on their investment?</em>
No of years(1982 to 2007) = 25 years
The average annual return is R%, so $25,000 * (1 + R)^25 = $100,000
(1 + R)^25 = $100,000 / $25,000
(1 + R)^25 = 4
<em>We take 25th root on each side</em>
(1 + R)^(25*1/25) =
1 + R = 1.0570
R = 1.0570 - 1
R = 0.057
R = 5.70%
So, the return (interest rate) they really earn on their investment is 5.70%.