What is the interest rate of an investment that pays $65 million next year with a current value of $58 million?
A)15.07%
B)10.77%
C)1.207%
D)1.12%
E)12.07%

Question

Quizplus · Accepted Answer

The interest rate can be found using the formula for future value: FV = PV(1 + r), where FV is the future value ($65 million), PV is the present value ($58 million), and r is the interest rate. Rearranging the formula to solve for r gives us r = (FV/PV) - 1. Plugging in the values gives us r = ($65 million / $58 million) - 1 = 1.1207 - 1 = 0.1207, or 12.07%.

What Is the Interest Rate of an Investment That Pays