In: Finance
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.
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%.