Lawson Company invests $60,000 today and has $148,560 by the end of eight years.What is the ﬁrm's compound annual interest rate? Use appendix Table 1, Table 2, Table 3 and Table 4.

Question

Quizplus · Accepted Answer

The compound annual interest rate can be calculated using the formula for future value: FV = PV * (1 + r)^n. Solving for r, we get r = (FV/PV)^(1/n) - 1. Plugging in the values: r = (148,560/60,000)^(1/8) - 1 = 0.12 or 12.00%.

Lawson Company Invests $60,000 Today and Has $148,560 by the End