Question

An investor who was not as astute as he believed invested $263,000 into an account 11 years ago. Today, that account is worth $202,800. What was the annual rate of return on this account

Answer 1

-2.33%

Step-by-step explanation:

An investor who was not as astute as he believed invested $263,000 into an account 11 years ago,

Given that,

Current value of account, future value = $202,800

Value of invested amount, Present value = $263,000

Time = 11 years

`Present\ value=(Future\ value)/((1+r)^(n))`

`263,000=(202,800)/((1+r)^(11))`

`263,000(1 + r) ^ {11} = 202,800`

`(1 + r) ^ {11} = (202,800)/(263,000)\\`

`(1+r)=(0.7711026616)^{(1)/(11)}`

(1 + r) = 0.9766466684

r = 0.9766466684 - 1

= - 0.02335333157

= - 2.33%

Therefore, the annual rate of return on this account is -2.33%.