Question

Suppose an investment offers to triple your money in 24 months (don't believe it).

Required:

What rate of return per quarter are you being offered?

Answer 1

Solution:
	Rate of return per quarter	14.72%
Working Notes:
	Triple in 24 months means in 24 months $1 will becomes $3
	In 24 months there is =24/3 = 8 Quarters
	Let r be the rate of return per quarter offered
	Amount at the end of 24 month = Amount at Beginning x (1+ rate per quarter)^(no of quarter in a year)
	$3 =$1 x (1+ rate per quarter)^8
	3^(1/8) = 1 + rate per quarter
	Rate per quarter = 3^(1/8) - 1
	Rate per quarter = 0.14720269
	Rate per quarter = 14.72% per quarter
Please feel free to ask if anything about above solution in comment section of the question.