Answer:
Annual rate of return = 3.6%
Step-by-step explanation:
The total amount that an investment made today would become if invested at a particular rate for certain number of years is known as the future value.
The future value formula would be used to work out the annual rate of return
FV = PV × (1+r)^n
The $3,980 is the future value, the 2,800 is the present value and the 10 is the number of period.
So applying the formula , we have
3,980 = 2,800 × (1+r)^10
Divide both sides by 2,800
(1+r)^10= 3,980/2,800
(1+r)^10 = 1.421428571
I+r = 1.42142 ^(1/10)
1+r=1.03579
collect like terms
r=1.0357918-1
r =0.035791
r=0.035791× 100
r= 3.579%
Annual rate of return = 3.6%