Question

Mr. Dow bought 100 shares of stock at $17 per share. Three years later, he sold the stock for $23 per share. What is his annual rate of return

Answer 1

10.60%

Step-by-step explanation:

The compound annual growth rate formula stated below can be used to determine the annual rate of return on the stock investment.

CAGR=(future value/present value)^(1/n)-1

future value is the future worth of the stock after three years i.e100*$23=$2300

Present value is the initial cost of the stock which is 100*$17=$1700

n is the number of years the stocks have been owned

CAGR=($2300/$1700)^(1/3)-1=10.60%