Hi there, I'm trying to work out the following question, but I am finding this question quite a struggle.
I can find out the overall percentage for two sets of data for example year-to-year percentage growth, but I don't know how to even start this question, still no success!
Here's the question:

A sum of money was invested in a risky fund which has increased in value over the last four years by 17%, 13%, -6% and 0% respectively. What is the overall percentage growth in the fund over this period and what is the average annual percentage growth?

Your help is my last resort!
Thanks
x

Just calculate it on a year by year basis.

After the first year, you have 1.17 times as much money as you started. After the second, you have 1.13 times as much as you did after year 1. After year 3, you have 0.94 times as much as you did at the end of year 2. After year 4, you have the same amount as after year 3.

So, the total growth is

, which means that the initial investment grew by 24.3% over those four years.

Notice that we simply multiply all of the annual returns together. To find out what the average percent growth is over four years, we need to know what number, multiplied by itself four times, will give us 1.2428. The answer is, of course, simply the fourth root!



Thus, the average annual growth rate was about 5.6%.

Make sense?

Quote:

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Originally Posted by jcaron2

Just calculate it on a year by year basis.

After the first year, you have 1.17 times as much money as you started. After the second, you have 1.13 times as much as you did after year 1. After year 3, you have 0.94 times as much as you did at the end of year 2. After year 4, you have the same amount as after year 3.

So, the total growth is

, which means that the initial investment grew by 24.3% over those four years.

Notice that we simply multiply all of the annual returns together. To find out what the average percent growth is over four years, we need to know what number, multiplied by itself four times, will give us 1.2428. The answer is, of course, simply the fourth root!



Thus, the average anual growth rate was about 5.6%.

Make sense?

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You should be my Math teacher. Clearly i do not understand my current one.
You're awesome!!