A good stock-based mutual fund should earn at least 10% per year over a long period of time. Consider the case of Barney and Lynn, who were overheard gloating (for all to hear) about how well they had done with their mutual fund investment. "We turned a $25,000 investment of money in 1982 into $100,000 in 2007."
a. What return (interest rate) did they really earn on their investment? Should they have been bragging about how investment-savvy they were?
b. Instead, if $1,000 had been invested each year for 25 years to accumulate $100,000, what return did Barney and Lynn earn?