Problem 4:

From the following price data, compute the annual rates of return for Lukas Co and Kruger Co compan

Time	Lucas Co	Kruger Co
1	10 $	30 $
2	12	28
3	11	32
4	13	35

How would you interpret the meaning of the annual rates of return? Picture the problem

Lucas Co

Time 2 = 12+0-10\10 = 0,2 = 20%

Time 3 = 11+0-12\12 = - 0,083 = -8,3%

Time 4 = 13+0-11\11 = 0,18 = 18%

Kruger Co

Time 2 = 28+0-30\30 = -6,6%

Time 3 = 32+0-28\28 = 14,29%

Time 4 = 35+0-32\32 = 9,38%

Time 1 Lucas Co 10 $ 12 2 3 4 Kruger Co 30 $ 28 32 35 11 13