All categories

2 years ago

You purchased stock for $18,000 ten years ago. Now the stock is worth $25,000. What was your annual rate of return?

Business

1 answer:

Paraphin [41]2 years ago

6 0

Answer:

3.3%

Explanation:

The yearly rate of return is calculated by taking the amount of money gained or lost at the end of the year and dividing it by the initial investment at the beginning of the year.

DATA

Future value = $25,000

Present value = $18,000

Time = 10 years

Formula:

Annual return = $(\frac{futurevalue}{presentvalue}) ^{1/time} -1$

Annual return = $(\frac{25000}{18000}) ^{1/10} -1$

Annal return = 3.3%

You might be interested in

Enterprises face the challenge of deciding which investments to make and how to allocate scarce resources to competing projects.

Tema [17]

Answer: Business case

Explanation: In other to eliminate the dilemma posed by having to allocate resources particularly in those which are not readily available in abundance or having to choose between two or more different options, tasks or projects, managers are often faced with a decision dilemma which are is usually analysed by making a business case in other to identify the modalities attached with each project or task on the basis of risk, benefit attached, cost, timing of such projects and so on. This will enable managers to arrive at a reasonable justification to choose an option over the other which will yield a longterm return or benefit to the organization.

5 0

2 years ago

Bernie Madoff invites you to invest $1,000 in his fund now and be guaranteed at least $1,500 in 4 years. What is the effective r

Nady [450]

Answer: 10.67%

Explanation:

Mr Madoff is offering to grow the current value of $1,000 to a future value of $1,500 in 4 years.

This is a future value problem.

1,500 = 1,000 * ( 1 + interest) ^ 4 years

( 1 + interest) ^ 4 = 1,500/1,000

( 1 + interest) = 4√(1,500/1,000)

1 + interest = 1.1066819197

Interest = 1.1066819197 - 1

= 10.67%

8 0

2 years ago

For the year ended December 31, year 3, Colt Corp. has a loss carryforward of $180,000 available to offset future taxable income

Reika [66]

The answer is 234,000

5 0

2 years ago

Tressor company is considering a 5-year project. the company plans to invest $90,000 now and it forecasts cash flows for each ye

Ad libitum [116K]

Interest rate Present value of an annuity

of $1 factor for year 5

10% 3.7908

12% 3.6048

14% 3.4331

Calculate the internal rate of return to determine whether it should accept this project.

The project should be accepted because it will earn more than 14%.

The project should be accepted because it will earn more than 10%.

The project will earn more than 12% but less than 14%. At a hurdle rate of 14%, the project should be rejected.

The project should be rejected because it will earn less than 14%.

The project should be rejected because it will not earn exactly 14%.

Answer : The IRR of the project is 15.24%.

The project should be accepted since it will earn more than 14%.

The NPV at 10% is $ 12351.6

The NPV at 12% is $7329.6

The NPV at 14% is 2693.7

Since NPV is positive at 14%, we may safely conclude that the IRR of the project is greater than 14%.

The NPV at 15% is 90,508.19

The NPV at 16% is 88,405.93

By interpolation, we can determine that the IRR of the project is 15.24%.

8 0

2 years ago

The Danser Corporation expects to generate sales equal to $30,000 in January, $33,000 in February, and $38,000 in March. Twenty

olchik [2.2K]

Answer:

101000

Explanation:

4 0

2 years ago