solution
Initial investment, P=12,500
Final value, C=15,500
Duration, n=4 years
Let the interest rate =r
Assuming her initial investment is compounded annually;
C=P (1+r)n15,500=12,500 (1+r)41.24=(1+r)4ln (1.24)=4 ln (1+r)0.0538=ln (1+r)e0.0538=1+r1.05525−1=0.05525=r
answer: the rate of return on her investment is 5.525%
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