An A&E firm planning for a future expansion deposited $44,000 each year for 5 years into a sinking (investment) fund that was to pay an unknown rate of return. If the account had a total of $457,000 immediately after the fifth deposit, what rate of return did the company make on these deposits?

Question

Business

Yasmine Sutton

22 August, 17:54

An A&E firm planning for a future expansion deposited $44,000 each year for 5 years into a sinking (investment) fund that was to pay an unknown rate of return. If the account had a total of $457,000 immediately after the fifth deposit, what rate of return did the company make on these deposits?

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Answers (1)

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Jeramiah Mendoza · Answer 1

rate = 59.70%

Explanation:

using Financial calculator

PV = - 44000, n=5, i=?, FV = $457000, pmt=0bthen compute i

using scientific calculator

A=P (1+r) ^n

solve for r

r=[ log (A/P) / log (n) ] - 1