Alex invests $2,000 in a company's stock. After a year, the value of Alex's stock has increased to $2,500. What rate of return h

Question

erastova

2 months ago

7

Alex invests $2,000 in a company's stock. After a year, the value of Alex's stock has increased to $2,500. What rate of return h

as Alex received?

Mathematics

2 answers:

babunello [11.8K] · Answer 1 · 2026-03-11T21:16:52+03:00

Alex's rate of return is 25%.

Detailed explanation:

In this scenario, Alex invested $2,000 in stock. After one year, the value of the stock rose to $2,500. We need to determine the rate of return Alex earned. Let's calculate it:

Initially, Alex placed $2000 into a company and after a year, the stock's worth increased to $2500, which is an increase of:

⇒ $2500-2000$

⇒ $ $500$

To find the rate of return, this is computed as:

⇒ $\frac{2500-2000}{2000}(100)$

⇒ $\frac{500}{2000}(100)$

⇒ $\frac{50}{2}$

⇒ $25\%$

Thus, Alex's rate of return is 25%.

PIT_PIT [12.4K] · Answer 2 · 2026-03-11T21:16:53+03:00

PIT_PIT [12.4K]2 months ago

5 0

The interest rate equals 25%

Explanation:

Provided data:

Principal amount, P = $2,000

Total amount, A = $2500

Duration, t = 1 year

Interest rate, r =?

We understand:

$Amount = P(1+\frac{r}{100})^t$

Substituting the known values gives:

$2500 = 2000 (1 + \frac{r}{100})^1\\ \\\frac{25}{20}= (1+\frac{r}{100})\\$

$\frac{5}{20} = \frac{r}{100}\\ \\r = \frac{100 X 5}{20} \\\\r = 25$

Thus, the interest rate is 25%