The closed nominal annual rate of return. Given: Initial Cost is $1000. Future cost is $2500. Interest is compounded quarterly. The time period is 5 years.

Khadija Wells

Khadija Wells

Answered question

2021-08-17

The closed nominal annual rate of return.
Given: Initial Cost is $1000.
Future cost is $2500.
Interest is compounded quarterly.
The time period is 5 years.

Answer & Explanation

broliY

broliY

Skilled2021-08-18Added 97 answers

Calculation:
Write the expression to calculate the future value.
F=P(1+i)n .......(I)
Here, the future value is F, the present value is P, the rate of interest is i and the time period is n.
Substitute $1000 for P, $2500 for F and 20 for n in Equation (I).
$2500=$1000(1+i)20
i=(2.5)1201
i=0.0468×100%
i4.7%
Conclusion:
Thus, the correct answer is option (b) 4.7%.

Do you have a similar question?

Recalculate according to your conditions!

Ask your question.
Get an expert answer.

Let our experts help you. Answer in as fast as 15 minutes.

Didn't find what you were looking for?