Question

Calculate the total return percentage for Katy's investment using the formula: Total Return = (Ending Value - Initial Value) / Initial Value Katy pays $14,500 for shares and sells them 8 years later for $12,500. Round your answer to the nearest tenth of a percent.

Answer 1

Katy's investment had a total return of -13.8% when calculated using the given formula, indicating a loss on her initial investment.

Step-by-step explanation:

To calculate the total return percentage for Katy's investment, we use the formula: Total Return = (Ending Value - Initial Value) / Initial Value. In Katy's case, she paid $14,500 for her shares and sold them for $12,500 after 8 years.

Plugging in the values, we get:
Total Return = ($12,500 - $14,500) / $14,500
Total Return = -$2000 / $14,500

Total Return = -0.1379 or -13.79%

Therefore, rounded to the nearest tenth of a percent, Katy's investment had a total return of -13.8%.