What is the rate of return on an investment of $124,090 if the company expects to receive $10,000 per year for the next 30 years?
A) 7 percent
B) 4 percent
C) 6 percent
D) 5.5 percent

Question

Quizplus · Accepted Answer

The rate of return is calculated by dividing the annual income by the initial investment. In this case, the annual income is $10,000 and the initial investment is $124,090. Therefore, the rate of return is $10,000/$124,090 = 0.0806, or 8.06%. The closest answer choice is 7%, so the correct answer is A.

What Is the Rate of Return on an Investment of $124,090