   # Consider the following data. Period Rate of Return (%) 1 −6.0 2 −8.0 3 −4.0 4 2.0 5 5.4 What is the mean growth rate over these five periods? 13th Edition
Anderson
Publisher: CENGAGE L
ISBN: 9781305881884

#### Solutions

Chapter
Section 13th Edition
Anderson
Publisher: CENGAGE L
ISBN: 9781305881884
Chapter 3.1, Problem 4E
Textbook Problem
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## Consider the following data. Period Rate of Return (%) 1 −6.0 2 −8.0 3 −4.0 4 2.0 5 5.4 What is the mean growth rate over these five periods?

To determine

Find the mean growth rate over the five periods.

### Explanation of Solution

Calculation:

The given information is that the data represents the rate of return for five periods.

The geometric mean is often used for finding the mean growth rate.

The mean growth factor over the five periods is,

x¯g=(x1)(x2)(x3)(x4)(x5)5

The growth factors can be obtained as follows:

Growth rate of x1=1006100=0.94

Growth rate of x2=1008100=0.92

Growth rate of x3=1004100=0

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