Answered: At time 0 you had $2500 in the bank and…

At time 0 you had $2500 in the bank and 21 years later you had $15650. Calculate the effective annual rate of return if the bank pays interest continuously

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 4QTD

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Question

At time 0 you had $2500 in the bank and 21 years later you had $15650. Calculate the effective annual rate of return if the bank pays interest continuously

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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