# Percentage profit on investment

• Dec 23rd 2010, 05:31 AM
eshroom
Percentage profit on investment
I did maths A-level but this is confusing me more than it perhaps should:

On an 18month investment. The first 12 months had a capital input of 7200, the last six months had a further 10200 invested brining the total capital input up to 17400. At the end of the 18 months the profit was exactly 3000.
Assuming the annual rate of interest is constant regardless of the amount invested, what is the average annual rate of interest as expressed in a % form. Please show your working.
Thanks
• Dec 23rd 2010, 06:37 AM
Wilmer
r = AVERAGE interest rate

7200(1.5)r + 3000(.5)r = 3000

Solve for r
• Dec 23rd 2010, 08:37 AM
eshroom
Quote:

Originally Posted by Wilmer
r = AVERAGE interest rate

7200(1.5)r + 3000(.5)r = 3000

Solve for r

Should it not be:

7200(1.5)r + 10200(.5)r = 3000

?
• Dec 23rd 2010, 11:29 AM
Wilmer
No.
• Dec 24th 2010, 02:23 AM
HallsofIvy
Yes, it should be. The problem said "an additional 10200 is invested". Wilmer appears to think that an additional 3000 was invested, bringing the total to 10200 but that is not what is said. There was 7200 invested for 1.5 years, and an additional 10200 inversted for .5 year.
• Dec 24th 2010, 03:18 AM
eshroom
Thank you! Seems so simple now.
• Dec 24th 2010, 05:43 AM
Wilmer
Quote:

Originally Posted by eshroom
The first 12 months had a capital input of 7200, the last six months had a further 10200 invested brining the total capital input up to 17400. At the end of the 18 months the profit was exactly 3000.

I did it using this instead of above:
The first 12 months had a capital input of 7200, the last six months had a further 3000 invested brining the total capital input up to 10200. At the end of the 18 months the profit was exactly 3000.

Too much egg nog? Apologies...