An agricultural corporation that paid 53% in income tax wanted to build a grain elevator...

To calculate the annual rate of return on the investment, you can use the formula for the compound annual growth rate (CAGR):

CAGR=(FVPV)1n−1\text{CAGR} = \left(\frac{FV}{PV}\right)^{\frac{1}{n}} - 1CAGR=(PVFV​)n1​−1

Where:

FVFVFV is the future value ($6,000)

PVPVPV is the present value ($3,000)

nnn is the number of years (8 years)

CAGR=(60003000)18−1≈(2)18−1≈0.091or9.1%\text{CAGR} = \left(\frac{6000}{3000}\right)^{\frac{1}{8}} - 1 \approx (2)^{\frac{1}{8}} - 1 \approx 0.091 or 9.1\%CAGR=(30006000​)81​−1≈(2)81​−1≈0.091or9.1%