Question

you invest $25,000 in a Perpetuity fund that pays you $3,000 a year forever what is your rate of return in this investment

Answer 1

12%

Step-by-step explanation:

Calculation for what is your rate of return in this investment.

Using this formula

Rate of return=Amount paid a year /Amount invested in

Perpetuity fund

Let plug in the formula

Rate of return=$3,000/$25,000

Rate of return=0.12*100

Rate of return=12%

Therefore the Rate of return will be 12%