What Annual Rate of Return Is Earned on an $895

question 103

Multiple Choice

What annual rate of return is earned on an $895 investment that grows to $1,976 in eight years?

• A) 9.14 percent
• B) 9.97 percent
• C) 10.41 percent
• D) 11.73 percent

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Definitions:

Discount

A reduction in the price of a good or service, typically to encourage purchase.

Cash Interest

The actual amount of interest paid in cash by a borrower during a given period for the use of borrowed funds.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments due on any type of debt for a specific period.

Issuing Company

A corporation or entity that releases or sells financial instruments like stocks or bonds to raise capital.