What Is the Expected Rate of Return on a $3 Million Investment Over Ten Years?

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To determine the expected rate of return on a $3 million investment growing to $6 million over ten years, the annual percentage yield (APY) can be calculated using the formula for compound growth. The expected rate of return is approximately 7.2% per year, which can be derived from the formula for compound interest. While some participants reference financial concepts like beta and market risk premium, the core focus remains on the straightforward calculation of growth over time. Many contributors highlight the simplicity of the problem, emphasizing its resemblance to basic exponential growth. Understanding these calculations is essential for evaluating investment performance effectively.
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Homework Statement



I have searched the net for an online calculator to figure out this problem. Your expertise would help!

An investment of 3 million dollars is expected to become 6 million dollars in ten years. What is the expected rate of return?




Homework Equations



E(Ri) = Rf + ßi(Rm – Rf); whereby E(Ri) is the expected rate of return on an investment, Rf is the rate of return on risk-free asset, ßi is an investment's beta, and (Rm – Rf) is the market risk premium;





The Attempt at a Solution

 
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Since we're mostly people with physics and math backgrounds, many people in here probably don't even know what beta or market risk premium mean.

When I first read the question, it looked like a basic exponential growth problem, and they're asking for the annual percentage yield (APY) for the investment.
 

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