CFA CFA Level 1 Realized rate of return

Realized rate of return

  • This topic has 2 replies, 2 voices, and was last updated Jun-19 by cfastaf.
  • Author
    Posts
    • cfastaf
      Participant
      Up
      0
      Down

      85.503075=127.015881/(1+r)to the power of 4

      Answer is r=0.1040

      How did they get to that answer from the above equation?

    • mincemeat23
      Participant
      Up
      3
      Down

      Honestly, I’m not sure if you’re trolling at this point – your questions are a matter of working through the algebraic calculations. Anyways in the spirit of good community spirit:

      85.503075 = 127.015881 / [(1 + r)]^4

      [(1 + r)]^4 = 127.015881 / 85.503075

      [(1 + r)]^4 = 1.48551243332

      (1 + r) = (1.48551243332)^(1/4)

      (1 + r) = (1.48551243332)^(1/4)

      1 + r = 1.104

      r = 1.104 – 1

      r = 0.104

    • cfastaf
      Participant
      Up
      3
      Down

      not a troll man i see where i went wrong, i didn’t do it to the power of 0.25 but rather 4. thanks much

Viewing 2 reply threads
  • You must be logged in to reply to this topic.