The annual return percentages will be evaluated using the formula:
A=P(1+r/100)^n
where:
A=amount
P=principle
r=rate
n=time
a] A=$500, P=$400, n=1 years
500=400(1+r)^1
solving for r we shall obtain:
1.25=1+r
hence
r=1.25-1
r==0.25
annual rate of investment is 25%
b] A=2500+100=$2600, P=$ 2000, n=1 year
hence
2600=2000(1+r)^1
2600/2000=1+r
1.3=1+r
r=1.3-1
r=0.3
annual rate of investment is 30%
Answer:
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