What Annual Rate of Return Is Earned on a $5,000

question 42

Multiple Choice

What annual rate of return is earned on a $5,000 investment when it grows to $7,000 in six years?

• A) 1.40 percent
• B) 5.45 percent
• C) 5.77 percent
• D) 40.00 percent

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Definitions:

Reference Pricing

A type of psychological pricing in which a lower-priced item is compared to a more expensive brand in hopes that the consumer will use the higher price as a comparison price.

Price Skimming

A pricing strategy involving setting an initially high price before gradually lowering it over time as the product's novelty wears off.