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A customer has made an investment that pays $20 of interest during its first year and that has appreciated by $250, for a year-end value of $1,300. The customer's total return is:

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pedrocarratore

Answer:

0.2571 or 25.71%

Explanation:

In this case, even though the initial amount invested is not given, it can be found by subtracting the amount by which the investment appreciated of the year-end value:

[tex]A = \$1,300 - \$250\\A = \$1,050[/tex]

The return rate is given by the interest payed added to the amount appreciated, divided by the initial investment:

[tex]r=\frac{\$250+\$20}{\$1,050} \\r=0.2571= 25.71\%[/tex]

The customer's total return is 0.2571 or 25.71%

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