SOLUTION: A person pays $100,000 for an investment that promises to pay $15,000 per year at the end of each year for ten years. What is the rate of return on the investment?

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Question 582547: A person pays $100,000 for an investment that promises to pay $15,000 per year at the end of each year for ten years. What is the rate of return on the investment?
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!
If the investment pays $15,000 for ten years, then it will pay back a total of 10*15000 = 150000 dollars.

Rate of Return = (Final - Initial)/(Initial)

Rate of Return = (150000 - 100000)/(100000)

Rate of Return = (50000)/(100000)

Rate of Return = 0.5

So the rate of return is 50%