You paid cash for $1,400 worth of stock a year ago. Today the portfolio is worth $2,134. a. What rate of return did you earn on the investment?

rate of return on investment = 52.4%

Explanation:

The rate of return earned on the investment can be worked out using the Future value of a lump sum formula. The future value of a lump sum is the amount lump would amount to if interest is earned and compounded at a certain interest rate.

The formula is  FV = PV × (1+r)^(n)

PV = Present Value- 1,400

FV - Future Value, - 2,134

n- number of years- 1

r- interest rate - ?

2,134  = 1,400× (1+r)^(1)

(1+r)^(1) = 2,134/1,400

r= 1.5242  - 1

r = 0.524   × 100 = 52.4%

r= 52.4%

rate of return on investment = 52.4%

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