Solving for Rates What annual rate of return is earned on a $10,000 investment when it grows to $15,000 in 10 years?
A)1.50 percent
B)3.97 percent
C)4.14 percent
D)5.00 percent

Question

Quizplus · Accepted Answer

To solve for the annual rate of return, we can use the formula: 
End Value = Principal x (1 + Rate)^Time

Plugging in the given values, we get: 
$15,000 = $10,000 x (1 + Rate)^10

Dividing both sides by $10,000: 
1.5 = (1 + Rate)^10

Taking the 10th root of both sides: 
1 + Rate = 1.0414

Subtracting 1 from both sides: 
Rate = 0.0414 or 4.14%

Therefore, the correct answer is C) 4.14 percent.

Solving for Rates What Annual Rate of Return Is Earned