I missed this question on my exam. I would like to know how did they arrive at 35%. Please show me how. Thank you! **Question 3****Amortization is the:**- ⭕ practice of charging interest on a loan.- ✅ process of gradually retiring a debt by periodic payments.- ⭕ compounding of interest.- ⭕ use of debt to enhance the rate of return.*Correct answer: process of gradually retiring a debt by periodic payments.*---**Question 4**Bill and nine of his friends each contributed $10,000 to form a real investment group. The group then purchased a small retail center for $350,000 using an interest-only loan for $250,000 at 10% annual interest. At the end of one year, the building was sold for $410,000. What is the rate of return on Bill's investment?- ⭕ 60%- ⭕ 17%- ✅ 35%- ⭕ 15%*You answered: 60%**Correct answer: 35%*

Rate of return or Return on Investment is a simple method of measuring the profitability percentage of an investment, in which the net profit earned is related to the cost of investment, formula :- ROI = Net return / cost of investment x 100Calculation of profit on sale of building(considering the loan amount) Selling price of building = 410,000 Less:- loan amount + one year interest = 250,000 + 10% on 250,000 =( 275000) Profit on sale = 135000. Now total contributors = 10 (bill and 9 other) Each one receives = 135000/10= 13,500 Calculation of ROI for bill:- Investment being 10,000. Profit = 13500-10000=3500 ROI = 3500/10, 000 x 100 = 35% (Note:- this is the bill's ROI which is calculated on his investment and what amount he receives after loan is paid)

Business

Management

u Answered rrect Answer Question 4 Bill and nine of his friends each contributed $10,000 to form a real investment group. The group then purchased a small retail center for $350,000 using an interest-only loan for $250,000 at 10% annual interest. At the end of one year, the building was sold for $410,000. What is the rate of return on Bill's investment? 60% 17% 0/2 pts 35%

u Answered rrect Answer Question 4 Bill and nine of his friends each contributed $10,000 to form a real investment group. The group then purchased a small retail center for $350,000 using an interest-only loan for $250,000 at 10% annual interest. At the end of one year, the building was sold for $410,000. What is the rate of return on Bill's investment? 60% 17% 0/2 pts 35%

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Question

100%

I missed this question on my exam. I would like to know how did they arrive at 35%. Please show me how. Thank you!

**Question 3**

**Amortization is the:**

- ⭕ practice of charging interest on a loan.
- ✅ process of gradually retiring a debt by periodic payments.
- ⭕ compounding of interest.
- ⭕ use of debt to enhance the rate of return.

*Correct answer: process of gradually retiring a debt by periodic payments.*

---

**Question 4**

Bill and nine of his friends each contributed $10,000 to form a real investment group. The group then purchased a small retail center for $350,000 using an interest-only loan for $250,000 at 10% annual interest. At the end of one year, the building was sold for $410,000. What is the rate of return on Bill's investment?

- ⭕ 60%
- ⭕ 17%
- ✅ 35%
- ⭕ 15%

*You answered: 60%*

*Correct answer: 35%*

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