Final answer:
To find the quarterly rate of return for an investment that quintuples your money in 24 months, you would use the compound interest formula and solve for the annual interest rate before dividing by 4 to find the quarterly rate.
Step-by-step explanation:
If an investment promises to quintuple your money in 24 months, we need to determine the equivalent quarterly rate of return. Since there are 8 quarters in 24 months, we can represent this scenario using the compound interest formula:
A = P(1 + r/n)^(nt)
Where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (in decimal).
- n is the number of times that interest is compounded per year.
- t is the time the money is invested or borrowed for, in years.
In your scenario, A/P should be equal to 5, as the money quintuples, n is 4 (as compounding occurs quarterly), and t is 2 years (which is 24 months).
The formula then becomes:
5 = (1 + r/4)^(4*2)
After solving for r, you would get:
r = 4*((5^(1/8)) - 1)
So, r is approximately 152.00% (rounded to two decimal places).