An initial investment of $500 produces a cash flow $550 one year from today. Calculate the rate of return on the project
A) 10%
B) 15%
C) 25%
D) none of the above

Name: An initial investment of $500 produces a cash flow $550 one year from today. Calculate the rate of return on the project A) 10% B) 15% C) 25% D) none of the above
Brand: Quizplus
Rating: 4.9 (32 reviews)

Question

Quizplus · Accepted Answer

The rate of return is calculated as (Final Value - Initial Investment) / Initial Investment. Here, it is ($550 - $500) / $500 = 0.10 or 10%.

An Initial Investment of $500 Produces a Cash Flow $550