What annual rate of return is earned on a $5,100 investment made in year 4 when it grows to $11,300 by the end of year 10?

What annual rate of return is earned on a $5,100 investment made in year 4 when it grows to $11,300 by the end of year 10?

14.18%

Explanation:

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Total return = (Ending value – Beginning value)/Beginning value

= ($ 11,300 – $ 5,100)/ $ 5,100

= $ 6,200 /$ 5,100 = 1.2156862745098

Annual return = (1+ Total return) (1/No of years) – 1

= (1 + 1.2156862745098) (1/6) – 1

= (2.2156862745098) (1/6) – 1

= (2.2156862745098) 0.166666667 – 1

= 1.14178599406128 – 1

= 0.14178599406128 or 14.18 %