Over Nine Years Craig Earned Interest of $29,700 on an Investment

question 315

Multiple Choice

Over nine years Craig earned interest of $29,700 on an investment of $16,000. What effective rate of return did he earn?

• A) 7.11%
• B) 9.44%
• C) 10.92%
• D) 12.37%
• E) 13.56%

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Definitions:

Depreciable Asset

An asset that loses value over time due to wear and tear, age, or obsolescence, and for which depreciation can be accounted for tax and accounting purposes.

Useful Life

The estimated time period that an asset is expected to be usable for the purpose for which it was acquired.

Consolidation

The process of combining financial statements from different entities within a single corporate group, treating them as a single entity.