You have an investment account that started with

$2,000

10

years ago and which now has grown to

$12,000.

a. What annual rate of return have you earned (you have made no additional contributions to the account)?

b. If the investment account earns

14%

per year from now on, what will the account's value be

10

years from now?

a. What annual rate of return have you earned (you have made no additional contributions to the account)?

Your annual rate of return is

nothing%.

2-

You receive a

$7,000

check from your grandparents for graduation. You decide to save it toward a down payment on a house. You invest it earning

7%

per year and you think you will need to have

$14,000

saved for the down payment. How long will it be before the

$7,000

has grown to

$14,000

?

To double the money you received from your grandparents, it will take

nothing

years.

3-

A local bank is running the following advertisement in the newspaper: "For just

$1,000

we will pay you

$100

forever!" The fine print in the ad says that for a

$1,000

deposit, the bank will pay

$100

every year in perpetuity, starting one year after the deposit is made. What interest rate is the bank advertising (what is the rate of return of this investment)?

The interest rate the bank is advertising is

nothing%.