Assume that at the beginning of the year, you purchase an investment for $10,500 that pays...

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Assume that at the beginning of the year, you purchase an investment for $10,500 that pays...

Assume that at the beginning of the year, you purchase an investment for $10,500 that pays $33 annual income. Also assume that the investment’s value has increased to $11,400 at the end of the year.

(a) What is the rate of return for this investment? (Enter your answer as a percent rounded to 2 decimal places.)

(b) Is the rate of return a positive or negative number? Positive or Negative?

business finance

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Answer 1

Answer #1

Rate of return = (Ending value + Income - Opening value)/Opening value

= (11,400+33-10,500)/10,500

= 8.8857%

i.e. 8.89%

b.The return is positive

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Answer 2

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