In investors deposits 10000.ten years later it is worth 17910.what rate of return did the investors earns on investment
10000 = 17910(1+i)^10
(1+i)^10 = 1.791
take the 10th root of both sides, solve for i
To calculate the rate of return, we need to use the formula for compound interest:
Future Value = Present Value * (1 + Rate)^Time
In this case, the Future Value is $17,910, the Present Value is $10,000, and the Time is 10 years. We need to solve for the Rate.
Rearranging the formula, we have:
Rate = (Future Value / Present Value)^(1/Time) - 1
Calculating the rate using the given values:
Rate = ($17,910 / $10,000)^(1/10) - 1
Rate = 1.791^(0.1) - 1
Rate = 1.082 - 1
Rate = 0.082
To express this as a percentage, we can multiply by 100:
Rate = 0.082 * 100
Rate = 8.2%
Therefore, the investor earned a rate of return of 8.2% on their investment over ten years.