An investor is thinking about buying some shares of Computer Engines,Inc., at $60 a share. she expect the price of the stock to rise to $100 a share over the next 3 years. What rate of return can she expect to earn on this investment?

Investors are thinking of buying shares in computer companies

Calculate the rate of return on investment using this formula

Rate of Return = (Future Price – Initial Price + Dividend) / Initial Price

The price of the shares is initially $60 and is projected to increase in the future by $100. Each year, the dividend payment is expected to be around $3 per share. We can use this information to determine a return rate as follows.

Rate of Return = ($100 – $60 + $3) / $60 = 10%

The investor, therefore, can earn 10% on her investment over the course of 3 years if everything goes as planned.