Answer: d. 10.5%
Explanation:
Formula for future value is;
Future value = Amount invested * ( 1 + r) ^ n
Making r the subject, the formula becomes;
= (Future value/ Amount invested)^ (1/n) - 1
= (500,000 / 120,000)^ (1/28) - 1
= 0.052289
= 5.23%
This is on twice-a-year basis so annual rate is;
= 5.23 * 2
= 10.46
= 10.5%
Note; Period of 28 was used because investment was compounded twice a year so the 14 years should double.
