Stephen's grandmother deposited $100 in an investment account for him when he was born,25 years ago.The account is now worth $1,500.What was the average rate of return on the account? Which of the following is a correct way to solve this problem using Excel?
A)=PV(25,i,-100,1500)
B)=rate(25,0,100,1500)
C)=rate(25,0,-100,1500)
D)=rate(0,-100,1500,25)

Question

Quizplus · Accepted Answer

The RATE function in Excel calculates the interest rate per period of an annuity. The correct syntax is RATE(nper, pmt, pv, fv), where nper is the number of periods (25 years), pmt is the payment per period (0, since no additional deposits were made), pv is the present value (-100, as it's an outflow), and fv is the future value (1500).

Stephen's Grandmother Deposited $100 in an Investment Account for Him