Final answer:
The investment earned an annual interest rate of 6.528%, compounded annually, after starting with $3300 and having a return of $4000 after 3 years.
Step-by-step explanation:
Finding the Compound Annual Growth Rate (CAGR)
To calculate the annual interest rate compounded annually that an investment earned, you can use the formula for Compound Annual Growth Rate (CAGR):
CAGR = (FV / PV)^(1/n) - 1
where:
FV = Future Value of the investment ($4000),
PV = Present Value of the investment ($3300), and
n = number of years (3).
Putting these values into the formula, we get:
CAGR = ($4000 / $3300)^(1/3) - 1
CAGR = 1.212121^(1/3) - 1
CAGR = 1.06528 - 1
CAGR = 0.06528 or 6.528% when expressed as a percentage.
So, the investment earned an annual interest rate of 6.528%, compounded annually.