An investor bought a one-acre lot on the outskirts of a city for $9000 cash....
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Accounting
An investor bought a one-acre lot on the outskirts of a city for $9000 cash. Each year she paid $80 of property taxes. At the end of 4 years, she sold the lot for a net value of $15,000. What rate of return did she receive on her investment?
Year Cashflow
0 -9000
1 - 80
2 - 80
3 - 80
4 - 80 (+ 15,000)
To solve for Rate of Return (ROR) I used :
PWi = $-9,000 - $80 (P/A,i,4) + $15,000 (P/F,i,4)
@ 12% = $-9,000 - $80 (3.3037) + $15,000 (0.6355) = $289.54
@ 15% = $-9,000 - $80 (2.855) + $15,000 (0.5718) = $-651.40
If these are correct, please show me how to interpolate here between 12% and 15%. (Do not use excel)
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