Answer:
A. Annual average growth rate=((last value/First value)^(1/Time between 1st and last value)-1)*100
Annual Growth rate=((7/3.5)^(1/5)-1)*100
Annual Growth rate% = 14.87
B. The statement is correct since the effect of compounding is not considered
Answer:
Explanation:
1.
A = P(1+r/100) ^ n
A = future value P = present value r = rate of interest n =time period.
7 = 3.5 x (1+r/100)^5
(7/3.5)^(1/5) = (1+r/100)
(1+r/100) = 1.1487
r = 1.1487-1
= 14.87%
2.The correct option is:
The statement is incorrect since the effect of compounding is not considered.
The statement is incorrect because effect of compounding ie 'interest on interest' factor is not considered in this case.
