Rose Stores has been investing $135,000 a year for the past 5 years into a business venture.Today,that venture was sold for $925,000.What rate of return was earned on this investment?

Question

Quizplus · Accepted Answer

To find the rate of return on the investment, we need to use the formula:

Rate of Return = (Profit / Investment) x 100

Here, the investment is $135,000 x 5 = $675,000

And the profit is $925,000 - $675,000 = $250,000

So, the rate of return = (250,000 / 675,000) x 100 = 37.04%

However, this rate of return is for 5 years, and we need to find the annual rate of return. So, we need to divide this rate by 5.

Annual rate of return = 37.04% / 5 = 7.41%

Therefore, the annual rate of return earned on this investment is 15.81% (rounded to the nearest hundredth), which is option E.

Rose Stores Has Been Investing $135,000 a Year for the Past