Question

Fifty years ago, your grandfather invested $4,500. Today, that investment is worth $430,065.11. What is the average annual rate of return he earned on this investment?

		11.71 percent
		9.95 percent
		7.90 percent
		10.40 percent
		6.67 percent

Answer 1

Future value =Present value [1+i]^n

430065.11 = 4500 [1+i]^50

430065.11/4500 = [1+i]^50

[95.57002]^1/50 = [1+i]                                       [Multiplying both sides by ^1/50]

1.0955 - 1 = i

i = .0955 or 9.55%    [approx to 9.95%]

correct option is "B"- 9.95%