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) - 1where:r = annual rate of returnFV = future valuePV = present valuen = number of yearsIn this case, the future value is $2,500, the present value is $900, and the number of years is 15. Plugging these values into the formula, we get:r = (2500/900)^(1/15) - 1r = 7.05%

What Annual Rate of Return Is Earned on a $900