Question

If a man paid $50,000 for a business which gave him a 6% return on his money, how much did he make during the first year that he owned it?

A. $2,500
B. $3,000
C. $3,500
D. $4,000

Answer 1

The man made $3,000 during the first year that he owned the business.

Step-by-step explanation:

To determine the amount earned during the first year on the business that was purchased for $50,000 and provided a 6% return on investment, you can use the formula for simple interest:

simple Interest=Principal × Rate

Given:

Principal (the amount invested) = $50,000

Rate of return = 6% (which is 0.06 in decimal form)

{Simple Interest} = $50,000 \times 0.06 = $3,000

Therefore, during the first year of owning the business, the man made $3,000 in profit. Hence, the correct answer is:

B. $3,000

This amount represents the return earned on the $50,000 investment at a 6% annual rate during the initial year of ownership.