you pay 8,000 for a municipal bond. when it matures after 20 years yo u receivee $12,500. what are the total return and the annual return
To calculate the total return and annual return, we need to consider the initial investment and the final amount received over the investment period.
To calculate the total return, subtract the initial investment from the final amount received:
Total Return = Final Amount - Initial Investment
In this case, the final amount received is $12,500, and the initial investment is $8,000:
Total Return = $12,500 - $8,000
Total Return = $4,500
The total return is $4,500.
To calculate the annual return, divide the total return by the investment period in years:
Annual Return = Total Return / Investment Period
In this case, the investment period is 20 years:
Annual Return = $4,500 / 20
Annual Return = $225
The annual return is $225.
So, the total return is $4,500 and the annual return is $225.