Question

You are promised to triple your investment in 7 years. What rate of interest per year are you being promised?

Group of answer choices

18.23%

Need more information

16.99%

14.38%

Answer 1

Formula for Annualized Return = (Present/Past)^(1/n) - 1

where, n = number of years = 7 years

As the Investment will triple in 7 years which means that if Past is $1 then Present is $3.

So, Annualized Return = (3/1)^(1/7) - 1

Annualized Return = 1.1699 - 1

Annualized Return = 16.99%

So, rate of interest per year are you being promised is 16.99%

Option 3