What annual rate of return is implied on a $1,000 loan taken next year when $1,500 must be repaid in year 5?
A) 8.45 percent
B) 10.00 percent
C) 10.67 percent
D) 12.50 percent

Question

Quizplus · Accepted Answer

The annual rate of return can be calculated using the formula for compound interest: $FV = PV \times (1 + r)^n$. Here, $FV = 1500$, $PV = 1000$, and $n = 5$. Solving for $r$, we get $r \approx 10.67\%$.

What Annual Rate of Return Is Implied on a $1,000