Question

Ten years ago you put $150000.00 into an interest earning account. Today it's worth $275000. What is the effective annual interest earned on the account

Answer 1

the effective annual interest earned on the account is 6.25%.

Step-by-step explanation:

The effective annual interest earned on the account can be calculated as follows :

PV = - $150,000

N = 10

PMT = $0

P/yr = 1

FV = $275,000

R = ?

Using a Financial calculator, the effective annual interest, R, earned on the account will be : 6.2488 or 6.25%.