Personal Finance 1st Edition by Jack R. Kapoor

Exercise 24

Calculating Total Return. Mark Crane purchased a $1,000 corporate bond five years ago for $1,060. The bond pays 4.5 percent annual interest. Five years later, he sold the bond for $950. Calculate the total return for Mr. Crane’s bond investment.

Step 1 of 4

Calculation of Total Return for Mr. MC on sale of bonds:

The purchase price of the bond is $1,060, interest rate is 4.5% and the sale price of the bond is $950 after 5yrs.

To find the annual interest rate, multiply the face value with the annual interest rate of the bond.