Martha invested $50,000 in a boutique 4 yr ago. Her investment is worth $100,000 today. What is the effective rate (annual effective yield) of her investment? Please round your answer to two decimal places.

Answer 1

we would be solving:

50000(1+i)^5 = 100000
(1+i)^4 = 2
take the 4th root
1+i = 1.189207..
i = .18920..
or 18.92 % as the effective rate to 2 decimals