If Colleen Mooney invests $3,003.34 now and she will receive $11,700 at the end

Question

If Colleen Mooney invests $3,003.34 now and she will receive $11,700 at the end of 12 years, what annual rate of interest will Colleen earn on her investment? (Hint: Use Table 3.) (Round answer to 0 decimal places, e.g. 25%.)

Click here to view the factor table Future Value of 1
Click here to view the factor table Future Value of an Annuity of 1
Click here to view the factor table Present Value of 1
Click here to view the factor table Present Value of an Annuity of 1

(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Explanation / Answer

Present investment value = $3,003.34

Future value of receipt = $11,700

Period = 12 years

Annuity factor = 11,700/3,003.34 = 3.895663

Check annuity table at 12 years for 3.895663 we can see between 23% - 24%

its nearest to 24%

Ans) Annual rate of return = 24%

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