You purchased a piece of property for $30,000 nine years ago and sold it today for $83,190. What was the annual rate of return on your investment?
A)12%
B)11%
C)10%
D)9%

Question

Quizplus · Accepted Answer

The annual rate of return can be calculated using the formula for compound annual growth rate (CAGR), which is: $$CAGR = \left(\frac{FV}{PV}\right)^{\frac{1}{n}} - 1$$ where $FV$ is the future value ($83,190), $PV$ is the present value ($30,000), and $n$ is the number of periods (9 years). Plugging in the values: $$CAGR = \left(\frac{83190}{30000}\right)^{\frac{1}{9}} - 1 \approx 0.12$$ or 12% annual rate of return.

You Purchased a Piece of Property for $30,000 Nine Years