Question

Greg initially invested $7,000 in a transportation company. The company recently paid annual dividends of $86 and his year-end investment value was $8,340. What was the rate of return on his investment? A. 22.00% B. 17.10% -C. 17.91% D. 20.37% E. 15.04%

Answer 1

option (D) 20.37%

Step-by-step explanation:

Year-end investment value = $8,340

initial invested amount = $7,000

annual dividends = $86

Increase in value

= (year-end investment value - initial invested amount) + annual dividends

= ($8,340 - $7,000) + $86

= $1,340 + $86

= $1,426

Now,

Return on investment =
`\frac{\textup{Increase in value}}{\textup{initial invested}}*100\%`

or

Return on investment =
`(\$1,426)/(\$7,000)*100\%`

or

Return on investment = 20.37%

Hence,

The answer is option (D) 20.37%