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melomori [17]
3 years ago
12

An investor originally paid $22,000 for a vacant lot twelve years ago. If the investor is able to sell the lot today for $62,000

, what would his annual rate of return be on this investment (rounded to the nearest percent)?
a.7%
b.9%
c.5%
d.11%
Business
1 answer:
MArishka [77]3 years ago
4 0

Answer:

b.9%

Explanation:

Formula for annual rate of return formula is as follows;

Annual rate of return = [ (New value/ Initial value)^(1/t) ] -1

t = the total holding period of investment = 12 years

Old value = 22,000

New value = 62,000

Next, plug in the numbers to the formula;

Annual rate of return; r = [ (62,000/22,000) ^(1/12) ] -1

r = [2.8182 ^(1/12)] - 1

r = 1.0902 -1

r = 0.0902 or 9%

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The expectations theory of the term structure of interest rates states that forward rates are determined by investors' expectations of future interest rates. It suggests that the predicted holding period rate of return of a bond of "x" number of time is equal to the short-term interest rate irrespective of its maturity.

The Expectations theory gives us the opportunity to predict the future outcome of short-term interest rates based on current long-term interest rates.

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How hospital capacity considerations differ from a factory.
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Answer:

$143,600

Explanation:

Calculation for What is net income for 20X1 assuming the investment is short-term

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