Respuesta :
A $4,000 investment that increases to $8,000 by the end of year 8 earns an annual rate of return of 18.92%.
The term annual percentage rate (APR) describes the annual rate that is produced by a payment that is owed to investors or levied to borrowers. The annual percentage rate
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
Hence,
$ 8,000 = $ 4,000 * ( 1+r/100) ^ 4
$ 8,000 /$ 4,000= ( 1+r/100) ^ 4
[2 ^ ( 1/4) ] -1 *100 = r
or r =18.92%
Annual rate , is a measure of the real cost of borrowing money over the course of a loan or the income generated by an investment. This includes any fees or other expenditures related to the transaction, but does not account for compounding. Consumers may compare lenders, credit cards, and investment goods using the annual rate , which gives them a concrete number to work with.
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