Answer: 55.39%
Explanation:
From the question, we are informed that Tim purchased a bounce house one year ago for $6,500 and that during the year it generated $4,000 in cash flow and if he sells the bounce house today, he could receive $6,100 for it.
His rate of return will be:
= [($6100 + $4000) - $6500]/$6500 × 100
= ($10100 - $6500)/$6500 × 100
= $3600/$6500 × 100
= 0.5539 × 100
= 55.39%
