Bruno deposited $7,500 into an investment account and seven years later, the balance in the account was $10,910. What is the rate of return on this investment if interest is compounded annually? 5.5% 6.0% 6.5% 45.5%

Bruno deposited $7,500 into an investment account and seven years later, the balance in the account was $10,910. What is the rate of return on this investment if interest is compounded annually? 5.5% 6.0% 6.5% 45.5%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 1P

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Question

Bruno deposited $7,500 into an investment account and seven years later, the balance in the account was $10,910. What is the rate of return on this investment if interest is compounded annually?

5.5%

6.0%

6.5%

45.5%

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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