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Sixty years ago, your mother invested $4,500. today, that investment is worth $430,065.11. what is the average annual rate of return she earned on this investment?

Verified Answer :

Aliwohaish12

I=(430065.11/4500)^(1/60))-1=about 0.08*100=8%

Answer: The average annual rate of return is 7.90% on which she earned.

Step-by-step explanation:

Since we have given that

Amount invested 60 years ago = $4500

After 60 years, Worth of investment = $430065.11

We need to find the average annual rate of return.

As we know the formula for "Rate of return":

\(r=\dfrac{Future\ value}{Present\ value}^{\dfrac{1}{time}}-1\\\\r=(\dfrac{430065.11}{4500})^{\frac{1}{60}}-1\\\\r=7.90\%\)

Hence, the average annual rate of return is 7.90% on which she earned.

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