Question

Ms. Lee is selling her investment in ML Industries Inc. for $165,000. Mirim bought it for...

Ms. Lee is selling her investment in ML Industries Inc. for $165,000. Mirim bought it for
$55,000 nine years ago. What is the annual return on her investment?
Select one:
A. 11.57%
B. 12.98%
C. 13.62%
D. None of the above

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Homework Answers

Answer #1
Step 1 Divide the future value by the present value.
Future Value 165000
Present Value 55000
=165000/55000
3
Step 2 Divide 1 by number of periods of investment
=1/9
0.111111
Step 3 Raise result of step 1 to the power of result of step 2
=3^0.1111111
1.129831
Step 4 Reduce 1 from result of step 3
1.129831
=1.12983095-1
0.129831
12.98%
Answer is 12.98% Option B
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