Question

The rate of return is the profit or loss on an investment as a percent of the initial investment cost. What is the rate of return on an investment that is now worth $20,880 and originally cost $18,000?

Answer 1

Answer:

Rate of return = 16%

Step-by-step explanation:

The computation of the rate of the return is shown below:

Data provided in the question

Current value of the investment = $20,880 = C

Originally cost = $18,000 = O

N = Net earnings = C - O

= $20,880 - $18,000

= $2,880

Based on the above information, the rate of return is

$= \frac{N}{O} \\\\ = \frac{\ 2,880}{\ 18,000}$

= 16%

Hence, the rate of return is 16%