On December $31,2016$ BGM Enterprises recorded an average annual rate of return of $18\%$

while Troik Investments Bureau recorded an average annual rate of return of $26\%$ on the

portfolio. As Chief Financial Officer of the holding company for BGM Enterprises and Troik

Investments Bureau you make the following projections for the next five $(5)$ years.

$($a$)$ BGM Enterprises average annual rate of return to grow at $5\%$ per annum the following

first two $(2)$ years, decline by $8\%$ in the third year due to poor commodity markets and

grow at a constant rate of $6\%$ thereafter.

$($b$)$ Troik Investment Bureau portfolios average annual rate of return was projected to

grow by $4\%$ in the first year, no growth in second and third years and grow at a

constant rate of $5\%$ thereafter.

Required:

A$.$ Compute the projected Arithmetic Mean rate of return for each of the two companies.

Comment on the results. $(10$ Marks$)$

B$.$ Compute the projected Geometric Mean rate of return for each of the two companies.

Comment on the results.