Eduardo bought a house for $320,000 five years ago.He has just sold it for $480,000.What annual rate of return did he earn on this investment?
A)10%
B)8.45%
C)1.08%
D)3.13%

Question

Quizplus · Accepted Answer

The formula for calculating the annual rate of return is [(Final Value - Initial Value) / Initial Value] / Number of Years. Using this formula, we get [(480000-320000)/320000]/5 = 0.0845 or 8.45%. Therefore, the best choice is B.

Eduardo Bought a House for $320,000 Five Years Ago