Bill is considering investing $450 at the end of each month in a fixed incone instrument. He will receive $27,000 at the end of four years. If interest is compounded monthly, what is the effective annual rate of return on the investment. A. 22.3% B. 15.1 % C. 11.6 % D. 11.1 % E. 13.6 %

Bill is considering investing $450 at the end of each month in a fixed incone instrument. He will receive $27,000 at the end of four years. If interest is compounded monthly, what is the effective annual rate of return on the investment. A. 22.3% B. 15.1 % C. 11.6 % D. 11.1 % E. 13.6 %

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 6PROB

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Question

B. 15.1 %

C. 11.6 %

D. 11.1 %

E. 13.6 %

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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