To find the rate of return on an investment, you can use the formula:
Rate of Return = (Gain from Investment / Cost of Investment) × 100
In this case, the gain from the investment is the interest earned, which is $500, and the cost of the investment is the initial amount, which is $10,000. Plugging these numbers into the formula gives us:
Rate of Return = ($500 / $10,000) × 100
Calculating this:
Rate of Return = 0.05 × 100 = 5%
This means that the rate of return on the $10,000 investment is 5%. This rate indicates how much profit was made relative to the investment made.