Solving for Rates What annual rate of return is earned on a $5,000 investment when it grows to $7,000 in six years?
A) 1.40%
B) 5.45%
C) 5.77%
D) 40.00%

Question

Quizplus · Accepted Answer

To calculate the annual rate of return, we can use the formula: 
(Ending value / Beginning value)^(1/number of years) - 1

Plugging in the values given, we get: 
(7000 / 5000)^(1/6) - 1 = 0.0577 or 5.77%

Therefore, the correct answer is choice C - 5.77%.

Solving for Rates What Annual Rate of Return Is Earned