Assume that at the beginning of the year, you purchase an investment for $14,700
ID: 2383644 • Letter: A
Question
Assume that at the beginning of the year, you purchase an investment for $14,700 that pays $95 annual income. Also assume the investment’s value has increased to $15,800 by the end of the year.
What is the rate of return for this investment? (Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.)
(a)
What is the rate of return for this investment? (Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.)
Explanation / Answer
1) investment’s initial value - investment’s value at the end of the year.
$15800 – $14700 = $1100
By adding annual income
$1100 + $95 = $1195
Divide total return by the original investment.
$1195 / $14700 = .08129 = 8.129%
2) positive , 8.129%