Answer:
r = 20.09%
Explanation:
we can use the future value formula to calculate the expected rate of return:
future value = present value x (1 + r)ⁿ
- future value = $25,000 x 3 = $75,000
- present value = $25,000
- n = 6
$75,000 = $25,000 x (1 + r)⁶
(1 + r)⁶ = $75,000 / $25,000 = 3
⁶√(1 + r)⁶ = ⁶√3
1 + r = 1.2009
r = 0.2009 = 20.09%
