You are considering investing in a security that will pay you ​$5 comma 000
 
in 27
 
years. The rate of return investors can earn on this investment if they buy it for ​$1 comma 432
 
is enter your response here
​%

To calculate the rate of return (or interest rate) on this investment, we can use the formula for the **present value of a lump sum**:

\[
PV = \dfrac{FV}{(1 + r)^n}
\]

Where:
- $PV$ is the present value (the price you are buying the investment for, $1,432),
- $FV$ is the future value (the amount you'll receive in the future, $5,000),
- $r$ is the rate of return (what we want to find),
- $n$ is the number of years (27 years).

Rearranging the formula to solve for $r$, we get:

\[
r = \left( \dfrac{FV}{PV} \right)^{\dfrac{1}{n}} - 1
\]

Now, I'll calculate the rate of return using these values.The rate of return on this investment is approximately **4.74%**.

Would you like more details on how this was calculated, or do you have any other questions?

Here are five related questions you might find interesting:
1. How does the time period affect the rate of return in an investment?
2. What is the difference between simple and compound interest when calculating returns?
3. How does inflation impact the future value of an investment?
4. Can this formula be applied to other types of investments, like bonds or stocks?
5. How would the rate change if the present value or future value were different?

**Tip:** It's important to compare the rate of return with inflation rates to understand the real purchasing power of your returns over time.

You are considering investing in a security that will pay you $5,000 in 27 years. The rate of return investors can earn on this investment if they buy it for $1,432 is enter your response here ​%

Learn how to calculate the rate of return on an investment of $1,432 that will pay $5,000 after 27 years. This problem covers the present value formula and the rearranged formula for determining the rate of return, with a solution of approximately 4.74%. Suitable for advanced high school or college-level students.

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