Question

Jill pays $15,500 for shares in a new company. She sells the shares 8 years later for $12,500. What was her total return on this investment? Round your answer to the nearest tenth of a percent.The Total Return on Jill's investment is %____

Answer 1

Explanation:

The formula for getting the ROI or Return of Investment is:

$ROI=\frac{finalvalue-initialvalue}{initial\text{ value}}\times100$

In the problem, the initial value is $15,500 while the final value is $12,500.

Plugging these data into the formula above, we get:

$TotalReturn=\frac{12,500-15,500}{15,500}\times100$

Then, simplify.

$\begin{gathered} TotalReturn=\frac{-3,000}{15,500}\times100 \\ TotalReturn=-0.193548\times100 \\ TotalReturn=-19.3548 \\ TotalReturn\approx-19.4\% \end{gathered}$

Answer:

The total return on Jill's investment is -19.4%.