Contemporary Engineering Economics Plus MyLab Engineering with eText -- Access Card Package (6th Edition)
Question
Book Icon
Chapter 7, Problem 1P
To determine

Calculate the rate of return.

Expert Solution & Answer
Check Mark

Explanation of Solution

Time period is denoted by n and interest rate is denoted by i. Rate of return (i) can be calculated as follows.

Future value=Invest2 year ago(1+i)n1,865=1,000(1+i)2i=0.3675

Rate of return is 36.57%.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Betty will need $12,000 in five years to pay for a major overhaul on her tractor engine. She has found an investment that will provide a 5% return on her invested funds. How much does Betty need to invest today so she will have her overhaul funds in five years?
DRAW THE CASH FLOW DIAGRAM Ashley purchased a common stock worth $5,000 every year (starting in year 1) for a period of 10 years. At the end of the 10th year, she sold all her stocks to a buyer for $80,000. Find the rate of return received on the investment.
Suppose you want to realize a future value of $150,000 in 30 years on an investment you make. The average annual rate of return is 8.75%. What will be the present value of your investment?

Chapter 7 Solutions

Contemporary Engineering Economics Plus MyLab Engineering with eText -- Access Card Package (6th Edition)

Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning