Question

If 200,000 is available for investment and 60,000 is invested at 20% per year with the remainder is invested at 12% per year. What is the overall rate of return on the 200,000?

Can someone help me figure this out on excel?

Answer 1

For the purpose of answering the question i have broken the same into two different Investment Categories

Investment Category	Rate of Return	Total Return Value
60,000	20%	12000
140,000	12%	16800

These two categories are basis the requisites of the question. One investment of 60,000 yield a rate of 20% if you multiply this 20% with 60,000, you get 12000 and the similar case is with 1,40,000 which when multiplied by 12% would yield 16,800

Here we can see that 20% * 60,000 = 12000 therefore the formula for calculation is as follows:-

Return= Rate of Return * Initial Investment.

Now, the second part is calculating the total earning or rate of return on 20,0000

Here we see that the initial investment is 2,00,000 and the overall return is 28.800 (12000+16800), Now if we substitute the same we get the following

28800=Rate of Return * 200000

or rate of return = 28800/200000 which is equal to 14.40%

This is illustrated as follows:-

Total Money Invested	Total Return Value ( By adding both investment categories)	Rate of Return (=Total Return Value/Total Money Invested)
200,000	28800	14.40%

Please feel free to ask your doubts in the comments section if any.