You’re trying to choose between two different investments, both of which have up-front costs of $104,000....

You’re trying to choose between two different investments, both of which have up-front costs of $104,000. Investment G returns $169,000 in 9 years. Investment H returns $289,000 in 16 years.

Calculate the rate of return for each of these investments. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

	Rate of Return
Investment G		%
Investment H		%

Expert Solution

Annual rate of return = [Future value /present value ]^1/n -1

Investment G: [169000/104000]^1/9 -1

= [1.625]^.11111 -1

= 1.0554 -1

= .0554 or 5.54%

Investment H =[289000/104000]^1/16 -1

= [2.77885]^ .0625 -1

= 1.066-1

= .0660 or 6.60%

jeff jeffy answered 1 year ago

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