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All-State Mutual Fund average annual compound rate of return

The All-State Mutual Fund has the following five-year record of performance:

2010 2009 2008 2007 2006
Net investment income $.98 $.85 $.84 $.75 $.64
Dividends from net investment income (.95) (.85) (.85) (.75) (.60)
Net realized and unrealized gains (or
lossess) on security transactions 4.22 5.08 (2.18) 2.65 (1.05)
Distributions from realized gains (1.06) (1.00) 0 (1.00) 0
Net increase (decrease) NAV $3.20 $4.08 ($2.19) $1.65 ($1.01)
NAV at beginning of year $12.53 $8.45 $10.64 $8.99 $10.00
NAV at end of year $15.73 $12.53 $8.45 $10.64 $8.99

a) Find this no-load fund's five year (2006-2010) average annual compound rate of return.
b) Also find its three year (2008-2010) average annual compound rate of return.
c) If an investor bought the fund in 2006 at $10.00 a share and sold it five years later in 2010 at $15.73, how much total profit per share would she have made over the five-year holding period?

Solution Preview

Formula: Compound Annual Growth Rate(CAGR) = {(Ending Value/Beginning Value)^(1/no. of years)} - 1

A. Average annual compound rate of return for 2006-2010

Ending Value = 15.73; ...

Solution Summary

The sollution computes All-State Mutual Fund average annual compound rate of return.

$2.19