Answer:
45.58%
Explanation:
Rate of return is the expected gain or loss on an investment, over a specific time period. It is derived as a percentage of the investment's original value or cost.
ROR = [CV - IV]/ IV × 100
CV is the current value of the investment (value at the end of the investment period)
IV is the initial value of the investment.
Note also, the assumption that interest payments are reinvested.
At the end of year 1, interest payment is $1,164.24
End of year 2 - $1,255.05
End of year 3 - $1,352.95
End of year 4 - $1,458.48
End of year 5 - $1,572.24
[Interest rate - 7.8%]
ROR = (1572.24 - 1080)/1080 × 100
ROR = 45.58%
