6) (2 pts) At the end of 2014 you invested $5000 into a mutual fund. You...

Question

Question

Answer 1

Answer #1

Answer 6

5000(1+i)⁴ + 3000(1+i)³ = 11900

By Hit and Trial Method:

if we substitute the value of i = 11% , the value of investment worth 11693

and if we substitute the value of i = 12%, then the value of investment worth 12082.

So, this means the annual average return on our investment must be between 11% and 12%.

Interpolation

$11900 11693 12082 -11693 0.12-0.11 i-0.11$

$(0.12-0.11) +0.11 12082-11693$

$i-11.532$ %

Answer 2

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