Question

Tyler invested 36,000 into Phillips 66 three years ago. Philips 66's value increased by 7.50% in 2017, 10.10% in 2018, and -6.30% in 2019. what has the average rate of return been for the last three years?

Answer 1

Answer-

Investment in Phillips 66 = 36000
Investment amount in 2017 = 36000 x 1.075 = 38700 [ 1+7.5 % = 1+ 0.075 = 1.075 ]
Investment amount in 2018 = 38700 x 1.1010 = 42608.70

Investment amount in 2019 = 42608.70 x ( 1 - 0.063) = 42608.7 x 0.937 = 39924.35 [ derease by 6.3 % ]  

Average rate of return for the last three years = [ ( 39924.35 - 36000 ) / 36000 /3 ] x 100 %

Average rate of return for the last three years = [ 3924.35 / 36000 /3 ] x 100 %

Average rate of return for the last three years = 0.109 / 3 x 100 %

Average rate of return for the last three years = 0.03633 x 100 %
Average rate of return for the last three years = 3.633 %