Solving for Rates What Annual Rate of Return Is Earned

question 83

Multiple Choice

Solving for Rates 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:

Long Run

A period in economics during which all factors of production and costs are variable, allowing full adjustment to any change in the economic environment.

Break-Even Point

This is the point at which total revenues equal total costs, and the business or project makes neither a profit nor a loss.

Firm's Output

The quantity of goods or services produced by a firm within a given time period.

Short Run

A period in economics where at least one factor of production is fixed and cannot be changed.