After 20 years, 100 shares of stock originally purchased for $1000 was sold for $5,000. What was the yield on the investment? Choose the closest answer.
a) 19%
b) 5%
c) 12.7%
d) 8%
final =initial(1+i)^t
5=(1+i)^20
log5=20log(1+i)
.0349=log(1+i)
1.08=1+i
Thank you for your response. What is the answer. Can you explain me the problem?
To calculate the yield on an investment, we can use the formula:
Yield = (Total Proceeds - Initial Investment) / Initial Investment * 100
In this case, the initial investment was $1000, and it was sold for $5000 after 20 years. Plugging these values into the formula, we get:
Yield = ($5000 - $1000) / $1000 * 100
Yield = $4000 / $1000 * 100
Yield = 400%
Now, we need to choose the closest answer from the given options:
a) 19%
b) 5%
c) 12.7%
d) 8%
The closest answer to 400% is 19%, so the correct answer is option a) 19%.