Final answer:
To calculate the rate of return that Aoife realized on her investment, we can use the formula for compound interest. By setting up an equation and solving for the rate, we find that the rate of return, compounded monthly, is approximately 3.26%.
Step-by-step explanation:
In order to calculate the rate of return that Aoife realized on her investment, we need to determine how many times her investment has grown in the given time period. Since her investment tripled in the last 5 years, we can say that it has grown 3 times. Now, we can use the formula for compound interest to calculate the rate of return:
Final amount = Principal x (1 + Rate/Number of periods) ^ (Number of periods x Time)
Since the investment tripled, the final amount is 3 times the principal. Plugging in the values, we get:
3 = 1 x (1 + Rate/12)^(12 x 5)
Simplifying the equation, we have:
3 = (1 + Rate/12)^60
Now, we can solve for the rate by taking the 60th root of both sides of the equation:
3^(1/60) = 1 + Rate/12
Subtracting 1 from both sides gives us:
3^(1/60) - 1 = Rate/12
Multiplying both sides by 12, we find that the rate of return, compounded monthly, is approximately 3.26%.