Over six years Craig earned interest of $8,400 on an investment of $20,000. What effective rate of return did he earn?

A) 15.56%
B) 6.02%
C) 7.00%
D) 11.53%
E) 14.71%

The effective rate of return can be calculated by dividing the total interest earned by the total amount invested and then dividing by the number of years. So, $8,400 / $20,000 = 0.42 (total interest rate for 6 years), then 0.42 / 6 = 0.07 or 7% per year. However, the effective annual rate (considering the compound interest effect) would be slightly less than the simple division suggests, making 6.02% a more accurate reflection of the effective annual rate.