Question

Alex invests $2,000 in a company's stock. After a year, the value of Alex's stock has increased to $2,500. What rate of return has Alex received?

Answer 1

Rate of return Alex has received is 25% .

Step-by-step explanation:

Here we have , Alex invests $2,000 in a company's stock. After a year, the value of Alex's stock has increased to $2,500. We need to find What rate of return has Alex received . Let's find out:

Alex initially invested $2000 in a company and after a year Alex's stock has increased to $2500 i.e. by :

⇒
`2500-2000`

⇒ $
`500`

So, rate of return Alex has received is given by :

⇒
`(2500-2000)/(2000)(100)`

⇒
`(500)/(2000)(100)`

⇒
`(50)/(2)`

⇒
`25\%`

Therefore , Rate of return Alex has received is 25% .

Answer 2

The rate of interest is 25%

Step-by-step explanation:

Given:

Principal, P = $2,000

Amount, A = $2500

Time, t = 1 year

Rate of Interest, r = ?

We know:

`Amount = P(1+(r)/(100))^t`

On substituting the value we get:

`2500 = 2000 (1 + (r)/(100))^1\\ \\(25)/(20)= (1+(r)/(100))\\`

`(5)/(20) = (r)/(100)\\ \\r = (100 X 5)/(20) \\\\r = 25`

Therefore, the rate of interest is 25%