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Question 95510: Suppose you make a principal investment (P) of $5000 in the stock market after two years (t) your stocks have an accured value (A) of $20,000. What is the annual rate of return based on compound interest. (A=P(1+r)t...
i thought that it would be 100% but it could be 1%, 20%, 400% or either none
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Suppose you make a principal investment (P) of $5000 in the stock market after two years (t) your stocks have an accured value (A) of $20,000. What is the annual rate of return based on compound interest. A(t)=P(1+r/n)^(nt)
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20000= 5000(1+r)^(1*2)
4 = (1+r)^2
Take the square rt of both sides
1+r = 2
r = 1
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Yes, that's 100%
Cheers,
Stan H.
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