Algebra question about investment (related to economics and percentage)
I have this school activity, I did do it, but my answers did not match! I would really really appreciate it if you could help me by explaining and giving me the answer. God bless you!
John, a beginner in investments was in doubt between 2 assets to invest.
- The first would be a fund that offered security and reasonable volatility. This would expire after 6 years, paying 8% per year.
- The second was an investment with greater risk but a greater expectation of return. It was a real estate fund that had been performing well in recent months.
John opted for the 2nd option and invested U$10,000.00 in this fund, acquiring 100 shares for U$100.00 each. After a year, the quotas devalued significantly and reached U$90 each.
He then decided to sell his shares and invest in a fixed-rate fund that expires in 5 years, giving up liquidity. Given this situation, what should be, approximately, the annual rate of this fund for the future value to be equaled to the first option?