Question

Assume that at the beginning of the year, you purchase an investment for $8,200 that pays $80 annual income. also assume that the investment’s value has increased to $9,000 at the end of the year. A) 9.76%

B) 10.98%
C) 11.60%
D) 12.20%

Answer 1

The total return on the investment is calculated by combining the investment's income and appreciation, then dividing by the initial investment and multiplying by 100 to get a percentage. The closest correct answer from the options is 10.98%.

Step-by-step explanation:

The question asks to calculate the total return on an investment. The initial purchase price of the investment is $8,200, and at the end of the year,

the investment value has increased to $9,000, plus it pays $80 in annual income. To calculate the total return, add the annual income to the increase in investment value, then divide by the initial investment and multiply by 100 to get the percentage.

The increase in investment value is $9,000 - $8,200 = $800. Adding the annual income of $80, we get a total increase of $800 + $80 = $880. Now, we divide this by the initial investment of $8,200 and multiply by 100 to get the total return percentage:

Total Return = ($880 / $8,200) * 100 = 10.73%

This percentage is not listed in the options, so we must review the approach and consider that the options given may represent the closest correct answer. By reassessing the numbers, we find that the closest correct answer from the provided options is B) 10.98%.