Mr. Darden is selling his house for $165,000. He bought it for $55,000 nine years ago. What is the annual return on his investment?

Name: Mr. Darden is selling his house for $165,000. He bought it for $55,000 nine years ago. What is the annual return on his investment?
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Question

Quizplus · Accepted Answer

The annual return can be calculated using the formula for compound annual growth rate (CAGR): CAGR = (Ending Value/Beginning Value)^(1/Number of Years) - 1. Here, CAGR = ($165,000/$55,000)^(1/9) - 1 = 0.13 or 13%.

Mr Darden Is Selling His House for $165,000