PLZ add explanation. 49) Four friends decide to make some investments. They don\

Question

PLZ add explanation.

49) Four friends decide to make some investments. They don't all have the same amount of equity, and each has a different idea as to what type of asset would generate the best return Ann has $100,000 in equity. She borrows $300,000 from her bank and pays $400,000 to buy a house. One year later, she sells her house for S500,000. Bob has S150,000 in equity. He buys a painting by a famous modern artist. Two years later he sels the painting for $300,000. Chuck as $50,000 in equity. He buys a piece of antique furniture and one year later sells it for $150,000. Dave has $200,000 in equity. Borrows S200,000 from his bank, and invests all of the money in shares in a small Australian gold mining company. Two years later he sells his shares for $600,000. Which investor has made the best retum on investment? a) Ann b) Bob e) Chuck d) Dave

Explanation / Answer

Chuck has highest ROI

Return on Investment = (Profit / Amount invested) *100

Ann

Return on Investment = (100,000 / 400,000) *100 = 25%

Bob

Return on Investment = (150,000 / 150,000) *100 = 100%

Chuck

Return on Investment = (100,000 / 50,000) *100 = 200%

Dave

Return on Investment = (200,000 / 400,000) *100 = 50%

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