Suppose that you are offered an investment that will cost $898 and will pay you interest...

Suppose that you are offered an investment that will cost $898 and will pay you interest of $70 per year for the next 20 years. Furthermore, at the end of the 20 years, the investment will pay $1,000. If you purchase this investment, what is your compound annual rate of return?

Expert Solution

compound annual rate of return =Using rate function in MS excel	rate(nper,pmt,pv,fv,type) nper =20 pmt =70 pv =-898 fv =1000 type =0	RATE(20,70,-898,1000,0)	8.04%
compound annual rate of return			8.04%

jeff jeffy answered 1 year ago

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Suppose that you are offered an investment that will cost $898 and will pay you interest...

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