Question

What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?

A. 10.64%.
B. 4.28%.
C. 8.04%.
D.​ 5.51%.

Answer 1

D

Step-by-step explanation:

It's accumulating for 5 years

`17000=13000(1+i)^5\\1.307692308=(1+i)^5\\\sqrt[5]{1.307692308} =1+i\\i=.05511`

Answer 2

It would be D. 5.51%