Fred is 29 and just sold an antique for $29311 that he purchased at age nine for $17800 .Fred's annual rate of return on this antique is 7.2 percent.

Question

Quizplus · Accepted Answer

The annual rate of return can be calculated using the formula for compound interest: $A = P(1 + r)^n$, where $A$ is the future value of the investment/loan, including interest, $P$ is the principal investment amount (the initial deposit or loan amount), $r$ is the annual interest rate (decimal), and $n$ is the number of years the money is invested or borrowed for. Given Fred's initial purchase price ($17,800) and the selling price ($29,311), and the time period of 20 years (from age 9 to 29), we can solve for $r$ to find the actual annual rate of return, which does not necessarily equal 7.2% without doing the specific calculation.

Fred Is 29 and Just Sold an Antique for $29311