An investment of 5000 in an Infotech common stock proved to

An investment of $5000 in an Infotech common stock proved to be very profitable. At the end of 3 years the stock was sold for $30,000. What was the rate of return on investment?

Solution

Let rate of return be x%

At this rate of return;present value of inflows=5000

5000=30000/1.0x^3

1.0x^3=(30000/5000)

1.0x=(6)^(1/3)

x=(1.8171-1)

=81.71%(Approx).