If you buy a share of stock for $15 and sell it two years later for $18.50, what is the annual percent return (on a compounded b

Question

aniked [119]

3 years ago

11

If you buy a share of stock for $15 and sell it two years later for $18.50, what is the annual percent return (on a compounded b

asis) that you received for your investment?

Business

1 answer:

nadya68 [22] · Answer 1 · 2022-05-16T06:58:08+03:00

Answer:

11%

Explanation:

Compounding is the method used to determine the future worth of an amount today while discounting is the method used to determine the present value of a future amount.

Both are related by

Fv = Pv(1 + r)^n

where Fv is the future amount

Pv is the present value

r = rate

n = time

As such,

18.5 = 15 (1 + r)^2

1.2333 = (1 + r)^2

1 + r = 1.11

r = 0.11

the annual percent on returns is 11%