Answer:
The annual rate is 4.68%.
Step-by-step explanation:
We are given the following in the question:
Monthly saving (C) = $25
Time (n) = 15 years =
[tex]15*12 = 180\text{ months}[/tex]
Future value (F) = $6,528.91
Using Future value if annuity due formula:
[tex]F = C \times (1+r) \times \dfrac{(1+r) ^n - 1 }{r}[/tex]
Putting values, we get,
[tex]6528.91 = 25 \times (1+r) \times \dfrac{(1+r) ^{180} - 1 }{r}[/tex]
Solving, we get,
[tex]r = 0.0039[/tex]
So annual rate of return shall be
[tex]r = 0.0039\times 100\times 12\\r = 4.68\%[/tex]
Thus, the annual rate is 4.68%.
