Question

Maxwell purchased $30,000 worth of 52-week T-Bills for $29,650. What will be the rate of return on his investment? (Round you two decimal places.)

Answer 1

Answer:

The rate of return per year = 1.18%

Explanation:

We know that 52 weeks = 1 year

Investment amount =  $29650

Now first find the return on investment by subtracting the purchase price from the actual value of T bills.

Return on the investment = Actual value of T bill – Purchase price  

Return on the investment = $30000 - $29650 = $350

The rate of return per year = (350/29650) * 100

The rate of return per year = 1.18%

Answer 2

The profit earned on an investment is divided by the cost of that investment to determine the return on investment (ROI). When represented as a percentage, an investment with a profit of $100 and a cost of $100 would have an ROI of 1 or 100%.

1.18% will be the rate of return on Maxwell's investment.

GIVEN

1 year = 52-weeks

Investment amount =  $29650

NOTE

Subtract the purchase price from the real value of T bills to get the return on investment.

FORMULA & COMPUTATION

$\text{Return on the investment = Actual value of T bill – Purchase price }$

$\text{Return on the investment} = 30,000 - 29,650 = 350$

$\text{The rate of return per year} = \frac{350}{29,650}$ × $100$

$\text{The rate of return per year} = 1.18$%

Therefore, 1.18% is the computed value of the rate of return on investment.

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