The return provided by $100 deposited for 10 years that results in a future value of $614.46 is -11.45%.

Question

Quizplus · Accepted Answer

To calculate the annual return we can use the formula:
Future Value = Present Value x (1 + Annual Return)^Number of Years
Plugging in the values:
$614.46 = $100 x (1 + Annual Return)^10
Solving for Annual Return:
(1 + Annual Return)^10 = 6.1446
1 + Annual Return = (6.1446)^(1/10)
1 + Annual Return = 1.1095
Annual Return = 1.1095 - 1 = 0.1095 = 10.95%
Therefore, the return provided is a positive 10.95% and not a negative 11.45%. Hence, the statement is false and the answer is B.

The Return Provided by $100 Deposited for 10 Years That