Question

Janae pays $16,000 for shares in a new company. She sells the shares 8 years later for $13,000. What was her total return on this investment? Round your answer to the nearest tenth of a percent.The Total Return on Janae's investment is _____%

Answer 1

Janae buys $16,000 in company shares and sold them 8 years later for $13,000.

We have to calculate the total return.

We can use the formula:

$\begin{gathered} \text{Total return}=\frac{\text{ Ending value - Initial value}}{\text{ Initial value}} \\ \text{Total return}=\frac{13000-16000}{16000} \\ \text{Total return}=\frac{-3000}{16000} \\ \text{Total return}\approx-0.1875 \end{gathered}$

The result is in approximate form.

We can multiply it by 100% to express it in percentage rounded to the nearest tenth of a percent:

$\text{Total return}=-0.1875\cdot100\%\approx-18.6\%$

Answer: The total return on Janae's investment is -18.6%.