Question: We use the following calculation to determine the simple average yearly return: AA = ((Ending Value - Beginning Value) x 100% / Number of Years
We use the following calculation to determine the simple average yearly return: AA = ((Ending Value - Beginning Value) x 100% / Number of Years where AA denotes the basic annual return. The ending value in this case is $42.70, the beginning value is $2.45, the number of years is 30 (since the investment was held for 30 years), and dividends are included in the finishing value. When we enter these values, we get: AA = ((42.70 - 2.45) / 2.45) x 100% / 30 = 55.13% As a result, the basic yearly return on this investment is 55.13%. We use the following calculation to determine the compound average annual return: GA = (End Value / Starting Value)1 - (1/Number of Years) where GA denotes the compound annual return. In this scenario, we use the identical values as before: $42.70 as the final value, $2.45 as the starting value, and 30 as the number of years. When we enter these values, we get: GA = (42.70 / 2.45)^(1/30) - 1 = 10.06% As a result, the compound yearly return on this investment is 10.06%. As a result, the correct answer is B. AA=55%, GA=10%
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