What Annually Compounded Rate of Return Must Rachel Earn in Her

question 193

Multiple Choice

What annually compounded rate of return must Rachel earn in her RRSP in order for month-end contributions of $450 to accumulate to $750,000 in 25 years?

• A) 12.26%
• B) 9.43%
• C) 10.71%
• D) 11.32%
• E) 11.93%

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Definitions:

FIFO

An inventory valuation method where the first items produced or purchased are the first sold, leading to inventory being valued at approximate recent costs.

LIFO

An inventory valuation method that assumes the last items added to the inventory are the first ones to be sold ("Last In, First Out").

Weighted Average

A calculation that takes into account the different degrees of importance of the numbers in a dataset, making some values count more heavily than others.

Cost Flow Assumption

Accounting methods used to determine the cost of goods sold and ending inventory, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).