8. You invested $2,000 in the stock market one year ago. Today, the investment is valued at $9,500. What return did you earn? What return would you need to suffer next year for your investment to be valued at the original $2,000?

Answer 1

a. P = Po + Po*r*t = $9,500
2,000 + 2000*r*1 = 9,500
Solve for r.

b. 9500 - 9500*r*t = 2000
9500 - 9500*r*1 = 2000
-9500r = 2000-9500 = -7500
r = 0.7895 = 78.95%