Maria wants to start a new business in collaboration with her husband and brother-in-law. The features she is looking for in the
1 answer:
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Answer:
Return on assets = 10.87 %
Return on assets = 11.42%
Return on assets = 12.51 %
Explanation:
given data
arithmetic average return = 13.60 percent = 0.1360
geometric return = 10.44 percent = 0.1044
observation period N = 30 years
solution
we will use here Blume formula for return of the asset for 5 , 10 and 20 year
Return on assets = Arithmetic average return × (N - T) ÷ (N - 1) + Geometric average × (T - 1) ÷ (N - 1) ....................1
here N is observation period and t is time period i.e 5, 10 and 20
put here value for all 3 we get
Return on assets =
Return on assets = 0.108759 = 10.87 %
and
Return on assets =
Return on assets = 0.114207 = 11.42%
and
Return on assets =
Return on assets = 0.125103 = 12.51 %