+0  
 
0
1963
1
avatar

Microsoft's stock price peaked at 6118% of its IPO price more than 13 years after the IPO.† Suppose that $25,000 invested in Microsoft at its IPO price had been worth $1,500,000 (6000% of the IPO price) after exactly 13 years. What interest rate, compounded annually, does this represent? (Round your answer to two decimal places.)

 Nov 25, 2014

Best Answer 

 #1
avatar+118667 
+5

 

$$\\1500000=25000(1+r)^{13}\\
60=(1+r)^{13}\\
60^{1/13}=1+r\\
r=60^{1/13}-1\\$$

 

$${{\mathtt{60}}}^{\left({\frac{{\mathtt{1}}}{{\mathtt{13}}}}\right)}{\mathtt{\,-\,}}{\mathtt{1}} = {\mathtt{0.370\: \!190\: \!226\: \!566\: \!422}}$$

 

$$\\37\%\\$$

.
 Nov 25, 2014
 #1
avatar+118667 
+5
Best Answer

 

$$\\1500000=25000(1+r)^{13}\\
60=(1+r)^{13}\\
60^{1/13}=1+r\\
r=60^{1/13}-1\\$$

 

$${{\mathtt{60}}}^{\left({\frac{{\mathtt{1}}}{{\mathtt{13}}}}\right)}{\mathtt{\,-\,}}{\mathtt{1}} = {\mathtt{0.370\: \!190\: \!226\: \!566\: \!422}}$$

 

$$\\37\%\\$$

Melody Nov 25, 2014

1 Online Users