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Norma-Jean [14]
3 years ago
9

An investor bought a one-acre lot on the outskirts of a city for $12,700 cash. Each year she paid $175 of property taxes. At the

end of 7 years, she sold the lot for a net value of $25,000. What rate of return did she recieve on her investment
Business
1 answer:
german3 years ago
7 0

Answer:

79.5%.

Explanation:

Rate of return = \frac{final value - initial value}{initial value} x 100

The cost of the acre = $12700.

Total property taxes paid for 7 years = $175 x 7

                                                             = $1225

Net value of cost = $12700 + $1225

                             = $13925

Net value of the land when sold = $25000

∴ Rate of return = \frac{25000 - 13925}{13925} x 100

                          = 0.7953 x 100

                          = 79.53%

The rate of return of the acre of land is 79.5%.

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