An investment of $10,000 in the
Emerging Country Debt Fund in 2001 was worth $24,780
in 2006 find the 5-year average annual
return.
Are you really taking a school class called "help?"
Since S=24,780 and P=10,000, you get
r = (24,780/10,000)^(1/(5-1)] = 1.2546 = 125%
Comment: The "1" might refer to the investment at the beginning of each year;
then the 0.25 would be the interest rate.
For example 10,000*(1+0.2546)^4 = $24,775
This would be the value after 4 years if 10,000 was compounded yearly
at 25%
To calculate the average annual return for a 5-year period, you need to know the initial investment value, the final investment value, and the number of years. In this case, the initial investment value is $10,000, the final investment value is $24,780, and the number of years is 5.
To find the average annual return, you can use the following formula:
Average Annual Return = ((Final Value / Initial Value) ^ (1 / Number of Years)) - 1
In this case, the formula becomes:
Average Annual Return = (($24,780 / $10,000) ^ (1 / 5)) - 1
Let's solve the equation step by step:
1. Calculate the value inside the parentheses:
$24,780 / $10,000 = 2.478
2. Calculate the exponent:
1 / 5 = 0.2
3. Raise the value to the power of the exponent:
2.478 ^ 0.2 = 1.126
4. Subtract 1:
1.126 - 1 = 0.126
Finally, multiply the result by 100 to express it as a percentage:
Average Annual Return = 0.126 * 100 = 12.6%
Therefore, the 5-year average annual return for the investment in the Emerging Country Debt Fund from 2001 to 2006 is 12.6%.