SOLUTION: Venture capital. Henry invested $12,000 in a new restaurant. When the restaurant was sold two years later, he received $27,000. Find his average annual return by solving the equati

Question 281404: Venture capital. Henry invested $12,000 in a new restaurant. When the restaurant was sold two years later, he received $27,000. Find his average annual return by solving the equation 12,000(1 + r)^2 = 27,000.

Answer by subudear(62) (Show Source): You can put this solution on YOUR website!
12,000(1 + r)^2 = 27,000
(1 + r)^2 = 27000/12000
(1 + r)^2 = 9/4
(1 + r) = sqrt (9/4)
1 + r = 3/2
r = 3/2 -1 = 0.5
so r = 0.5*100 = 50%
average anual return is 50%.
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