When your father was born 47 years ago, his grandparents deposited $175 in an account for him. Today, that account is worth $1,900. What was the annual rate of return on this account? Multiple Choice a 3.89 percent B 5.73 percent C 5.00 percent D. 4.86 percent E. 5.21 percent

When your father was born 47 years ago, his grandparents deposited $175 in an account for him. Today, that account is worth $1,900. What was the annual rate of return on this account? Multiple Choice a 3.89 percent B 5.73 percent C 5.00 percent D. 4.86 percent E. 5.21 percent

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 5DTM

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Question

When your father was born 47 years ago, his grandparents deposited $175 in an account for him. Today, that account
is worth $1,900. What was the annual rate of return on this account?

Multiple Choice
a 3.89 percent
B 5.73 percent

C 5.00 percent
D. 4.86 percent
E. 5.21 percent

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.

Expert Solution

Step 1

Amount deposited $175.

Term is 47 years

Value of account today $1,900

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