An investment grows by 22% over a 5 year period. What is its effective annual percent growth rate?

Answer 1

Let’s say we started with $100. If it grew by 22% it would be worth $122 . Our growth rate is x

so 122= (100) times x raised to the fifth power

1.22= x to the fifth

x= fifth root of 1.22 which is 1.041 so growth rate is 4.1%per year