How Do You Calculate the Rate of Return on an Investment

question 75

Multiple Choice

How do you calculate the rate of return on an investment?

• A) divide the sale price of the investment by its original purchase price
• B) subtract the amount of the original investment from the gain
• C) divide the original investment by the amount of the gain
• D) divide the amount of the gain by the original amount invested

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Definitions:

Current Liabilities

Short-term financial obligations that a company owes and is expected to pay within one year or within the normal operating cycle.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.

Cash Flow

The total amount of money being transferred into and out of a business, affecting its liquidity.

Receipts

Documentation of a transaction that provides proof of payment.