Question

Interest rate​ (with changing​ years). Keiko is looking at the following investment choices and wants to know what annual rate of return each choice produces. a.  Invest ​$360.00 and receive ​$788.17 in 11 years. b.  Invest ​$3 comma 000.00 and receive ​$11 comma 499.87 in 17 years. c.  Invest ​$31 comma 542.31 and receive ​$140 comma 000.00 in 22 years. d.  Invest ​$32 comma 895.12 and receive ​$1 comma 100 comma 000.00 in 40 years.

Answer 1

Answer:

7.38%

8.23%

7.01%

9.17%

Explanation:

Rate of return = (future value / amount invested)^(1/n) - 1

n = number of years

a. (788.17 / 360)^(1/11) - 1 = 7.38%

b. (11.499.87 / 3000) ^(1/17) - 1 = 8.23

c. (140,000 / 31,542.31)^(1/22) - 1 = 7.01

d. (1,100,000 / 32895.12)^(1/40) - 1 = 9.17