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If you earn $40 a year on a $500 investment, what is the annual rate of return?
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If you earn $40 a year on a $500 investment, what is the annual rate of return?
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Mathematics
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2021-09-05T15:59:09+00:00
2021-09-05T15:59:09+00:00 2 Answers
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Answer:
Annual rate of return is 8%
Step-by-step explanation:
Answer:
40/500 = 8%
Step-by-step explanation:
40/500 = 8%
So the answer is 8%/year. The question is if the $40 is reinvested, then will the following year’s return be 8% of $540 is $43.20? If it were, this would be an example of compound returns is getting interest (or a return) on the previously earned interest. That’s an 8% per annum simple yield. You’d be better off finding something that compounded your investment.