In a recessionary economy, interest rate on deposits can be 0 percent. However, Raymond has an investment of $25 000 now, and in three years it will mature and pay Raymond $32 000. What is the approximate rate of return on his investment?
A)8)3 percent
B)8)6 percent
C)8)9 percent
D)Insufficient information to calculate this question

Question

Quizplus · Accepted Answer

To calculate the rate of return on an investment, we can use the formula:

Rate of return = (final value - initial value) / initial value * 100

In this case, the initial value is $25 000 and the final value is $32 000, so:

Rate of return = (32 000 - 25 000) / 25 000 * 100
Rate of return = 7/25 * 100
Rate of return = 28%

Therefore, the approximate rate of return on Raymond's investment is 28%, which is closest to option B)8)6 percent.

In a Recessionary Economy, Interest Rate on Deposits Can Be