Question

In: Finance

Calculate using Excel:Your friend claims that he invested $5,000 seven years ago andthat this...

Calculate using Excel:

Your friend claims that he invested $5,000 seven years ago and that this investment is worth $ 38,700 today. For this to be true, what annual rate of return did he have to earn? Assume the interest compounds annually.

Solutions

Expert Solution

Amount Invested = $5,000

Future Value in 7 years = $38,700

calculating the Annual rate of Return using the Excel "RATE" function:-

The annual rate of return is 33.96%.


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