Stephen claims that he invested $6,000 six years ago and that this investment is worth $28,700 today.For this to be true, what annual rate of return did he have to earn? Assume the interest compounded annually.
A)28.87 percent
B)31.39 percent
C)29.80 percent
D)26.01 percent
E)27.87 percent

Question

Quizplus · Accepted Answer

To find the annual rate of return, we use the formula for compound interest: $ A = P(1 + r)^n $. Here, $ A = 28,700 $, $ P = 6,000 $, and $ n = 6 $. Solving for $ r $, we get $ r \approx 0.2980 $, or 29.80%.

Stephen Claims That He Invested $6,000 Six Years Ago and That