What annual rate of return would Grandma Zoe need to earn if she deposits $1,000 per month into an account beginning one month from today in order to have a total of $1,000,000 in 30 years?
A) 4.55%
B) 5.28%
C) 5.98%
D) 6.23%

Question

Quizplus · Accepted Answer

The correct answer is C) 5.98%.To calculate the annual rate of return, we can use the future value of an annuity formula:FV = P * [(1 + r)^n - 1] / rwhere:FV is the future value of the annuityP is the periodic paymentr is the annual interest raten is the number of periodsIn this case, we have:FV = $1,000,000P = $1,000n = 30 * 12 = 360Solving for r, we get:r = 5.98%

What Annual Rate of Return Would Grandma Zoe Need to Earn