Question

A small construction company has $110,000 set aside in a capital improvement fund to purchase new equipment. If $18,000 is invested at 26%, $22,000 at 15%, and the remaining $70,000 at 22% per year, what is the overall rate of return on the entire $110,000

Answer 1

21.26%

Step-by-step explanation:

Overall rate of return = Total amount of dollar returns / Total investment

Overall rate of return = [($18,000 * 26%) + ($22,000 * 15%) + ($70,000 * 22%)] / $110,000

Overall rate of return = ($4680 + $3300 + $15400) / $110,000

Overall rate of return = $23,380 / $110,000

Overall rate of return = 0.21255

Overall rate of return = 21.26%