Use of formula to generate annual return percentages
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CALCULATE THE ARITHMETIC AND GEOMETRIC RETURNS OF THESE NUMBERS:
year price dividend
1 $ 44.97 ---
2 47.37 $0.55
3 52.24 0.61
4 47.89 0.57
5 60.00 0.74
6 55.38 0.68
I want to used this formula:
[(1+R1) x(1+R2)x(1+R3)x(1+R4)x(1+R5)x(1+R6)] 1/t -1 t=years
I do not know how to get the annual return. What I did was to add the price and dividend but I think that is wrong.
Same question for this set of numbers:
year price dividend
1 $46.28 ---
2 49.29 .56
3 50.37 .55
4 44.26 .48
5 69.88 .82
6 63.98 .71
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Solution Summary
The solution includes a narrative statement to explain the use of the formula, and then calculates the answers in Excel.
Solution Preview
You need a raise the product to the power 1/t
The formula is [(1+R1) ...
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