Personal Finance 1st Edition by Jack R. Kapoor

Exercise 18

Calculating Rate of Return. Assume that at the beginning of the year, you purchase an investment for $7,100 that pays $80 annual income. Also assume that the investment’s value has increased to $7,590 at the end of the year.

a. What is the rate of return for this investment?

---

b. Is the rate of return a positive or negative number?

Step 1 of 4

An investor purchased an investment at the beginning of the year. The original cost is $7,100. Annual income from this investment is $80. At the end of the year, the value of the investment is changed to $7,590.