"a creditor provides a company with $100,000 cash by purchasing bonds at the end of year 1. the creditor receives $6,000 in interest from the company during year 2. the creditor sells the bonds at the end of year 2 or $102,000. what was the rate of return generated by this investment?

rate of return is 8%

Explanation:

given data

cash = $100,000

receives interest = $6,000

sells the bonds = $102,000

to find out

rate of return

solution

we will apply here Rate of returnformula that is

rate of return =      .....................1

here I is interest receive and A1 is sells the bonds

and Ao is cash

put her all value in equation 1 we get

rate of return =

rate of return = 0.08

rate of return is 8%

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