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39 votes
39 votes
Your cousin has asked you to bankroll his proposed business painting houses in the summer. He plans to operate the business for 5 years to pay his way through college. He needs $15000 to purchase an old pickup truck, some ladders, a paint sprayer and some other equipment. He is promising to pay you $4500 at the end of each summer for 5 years. Calculate the annual rate of return.

User Andy Copley
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1 Answer

22 votes
22 votes

Answer:

the annual rate of return is 15.24%

Step-by-step explanation:

The computation of the annual rate of return is shown below:

Given that

NPER = 5

PV = -$15,000

PMT = $4,500

FV = $0

The formula is shown below:

= RATE(NPER,PMT,-PV,FV,TYPE)

AFter applying the above formula, the annual rate of return is 15.24%

User Chris Gow
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3.5k points