Question

You invest $50 in a government bond that says you can redeem it a year later for $54. Use the instructions in Lesson 3 to calculate the ROI dollar amount and percentage. (2.0 points) TIP: Subtract the initial investment from the total return to get the ROI dollar amount. Then divide the ROI dollar amount by the initial investment, and multiply that number by 100 to get the percentage.

Answer 1

Answer: (ROI) = 8% per year.

Answer 2

Invested amount in a government bond = $50.

Total returned amount after 1 year =$54.

We need to find the amount of interest earned first.

Amount of intrest earned in a year  = Total returned amount after 1 year - Invested amount in the government bond.

Therefore, Amount of intrest earned in a year = $54 - $50.

                                                                              = $4.

Therefore, earned interest is $4 in an year.

Now, we need to find the intrest rate.

We know the formula,

$Interest \ rate=\frac{Earned \ Interest}{Invested \ Money} \times 100$

Plugging values in above formula, we get

Rate of interest = $\frac{4}{50} \times100$

Dividing 100 by 50, we get 2.

$\frac{4}{50} \times100= 4\times2=8$

Therefore, Rate of Interest (ROI) = 8% per year.