Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 7, Problem 1P
To determine

Calculate the rate of return.

Expert Solution & Answer
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Explanation of Solution

Time period is denoted by n and interest rate is denoted by i. Rate of return (i) can be calculated as follows.

Future value=Invest2 year ago(1+i)n1,865=1,000(1+i)2i=0.3675

Rate of return is 36.57%.

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