Question

Suppose Ivy invests $5,000 in her jewelry stand at the local shopping mall and her investment earns her $550. What is Ivy's return on investment?

Answer 1

Answer:

11%

Explanation:

The returns on an investment can be calculated as:

$r=\frac{I}{P}\cdot 100$

where:

r is the return

I is the interest earned in the investment

P is the principal (the amount of money invested)

In this problem for Ivy, we have:

P = $5,000 (amount invested by Ivy)

I = $550 (interest earned by Ivy)

Therefore, the return on the investment is:

$r=\frac{550}{5000}\cdot 100 = 0.11\cdot 100 = 11\%$