Can you estimate what the annual rate of return would be to grow $5000 into $20 million in 51 years? Show the Cash Flow Table and Diagram (20% or 100%)

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Expert Solution

We have to estimate the annual rate of return that will grow an initial deposit into a given future value in 51 years.

This is a question based on time value of money concept. In all such questions, all but one variable out PV, FV, r, N, PMT are given and we have to find the missing one. This question is no exception.

Let the desired annual rate of return be r.

Time, t	Amount ($)
0	-$5,000
51	$20,000,000

Initial amount, PV = 5000

Accumulated amount, FV = 20,000,000

Annual rate of return = r

Years to maturity, n = 51

Hence, the annual rate of return = 17.66%.

Nabeel answered 1 year ago

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