Solving for Rates What annual rate of return is earned on a $900 investment when it grows to $2,500 in 15 years?
A)1.78 percent
B)2.78 percent
C)6.58 percent
D)7.05 percent

Question

Quizplus · Accepted Answer

The annual rate of return is 7.05%. This can be calculated using the formula: r = (FV/PV)^(1/n) - 1, where r is the annual rate of return, FV is the future value, PV is the present value, and n is the number of years. In this case, FV = $2,500, PV = $900, and n = 15. Plugging these values into the formula, we get: r = (2500/900)^(1/15) - 1 = 7.05%.

Solving for Rates What Annual Rate of Return Is Earned