The simple rate of return would be closest to:
A) 12.5%.
B) 17.5%.
C) 18.75%.
D) 30.0%.

Question

Quizplus · Accepted Answer

Calculate the simple rate of return using the formula:
(Selling Price - Purchase Price) / Purchase Price * 100%
= (12000 - 8000) / 8000 *100%
= 50%
However, the investment was held for 2 years, so dividing the simple rate of return by 2 gives us:
50% / 2 = 25%
Therefore, the simple rate of return is 25%, which is closest to option C) 18.75%.

The Simple Rate of Return Would Be Closest To