Suppose your uncle invested $121,000 in an investment 4 years ago. The investment is worth now...

Suppose your uncle invested $121,000 in an investment 4 years ago. The investment is worth now $237,500. The annual interest rate (rate of return) on the investment during this period must be ______% per year.

(Do not include the percent signs (%). Round
your answers to 2 decimal places. (e.g., 32.16))

Expert Solution

Given, value of investment 4 years agao= 121000

value of investment today=237500

value of investment today is given as = value of investment 4 years ago*(1+interest rate) ^time

237500=121000*(1+interest rate)^4

237500/121000=(1+interest rate) ^4

(237500/121000)^(1/4)=1+interest rate

Interest rate =(237500/121000)^(1/4)-1

Interest rate =1.1836398-1=18.36398% or 18.36%

Hence the annual rate of interest must be 18.36% per year

jeff jeffy answered 2 years ago

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