Pregunta
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Interest rate (with changing years). Keiko is looking at the following investment choices and wants to
know what annual rate of return each choice produces.
a. Invest and receive in 11 years.
b. Invest and receive in 17 years.
c. Invest and receive in 20 years.
d. Invest and receive in 40 years.
a. What annual rate of return will Keiko earn if she invests today and receives in 11
years?
(Round to two decimal places.)

Ask by Alexander Vaughn. in the United States
Jan 22,2025

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The annual rate of return is 4.70%.

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Extra Insights

To find the annual rate of return, we can use the formula for compound interest, which is:
where:
  • is the amount received in the future ($746.23),
  • is the present investment amount ($450.00),
  • is the annual interest rate (as a decimal),
  • is the time in years (11).
Rearranging the formula to solve for :
Plugging in the numbers:
Calculating that gives:
Converting this to a percentage and rounding to two decimal places, Keiko’s annual rate of return is approximately .

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