Your parents paid $1,000 for a college fund bond when you were born. T

Your parents paid $1,000 for a college fund bond when you were born. Today is your 20th birthday and you are ready to cash the bond which has grown to a value of $3,361.85. What was the average annual rate of return on your college fund bond?

A) 5.50%
B) 6.25%
C) 6.73%
D) There is not enough information to answer this question.

ANSWER

B
Explanation: B) Via Calculator: N = 20, PV = 1,000, FV = 3,361.85, Solve for I =6.25%.