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lisov135 [29]
3 years ago
10

Your neighbor, Bayonetta, offers you an investment opportunity which will pay a single lump sum of $2,150 four years from today.

The investment requires a single payment of $1,100 today. What is the annual rate of return on this investment
Business
1 answer:
Olenka [21]3 years ago
3 0

Answer:

18.24%

Explanation:

Annual rate of return is used in determining the return on an investment over a 12 month or one year period.

Annual rate of return = [(future value / cost ) ^( 1/n) ] - 1

future value = 2150

present cost = 1100

n = number of years = 4

(2150 / 1100)^(1/4) - 1 = 0.1824 = 18.24%

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