"Give me $5,000 today and I'll return $20,000 to you in five years," offers the investment broker.To the nearest percent, what annual interest rate is being offered?
A)25 percent
B)29 percent
C)32 percent
D)60 percent $5,000 =

Question

Quizplus · Accepted Answer

To calculate the annual interest rate, we can use the formula:

Future Value = Present Value x (1 + r)^n

Where:
- Future Value = $20,000
- Present Value = $5,000
- n = 5 years
- r = annual interest rate

Plugging in the values, we get:

$20,000 = $5,000 x (1 + r)^5

Simplifying:

4 = (1 + r)^5

Taking the fifth root of both sides:

1.32 = 1 + r

r = 0.32 or 32%

Therefore, the offered annual interest rate is 32%. Option C is the best choice.

"Give Me $5,000 Today and I'll Return $20,000 to You