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anonymous

  • one year ago

Can someone help me determine the ROI?

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  1. anonymous
    • one year ago
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    @jim_thompson5910

  2. jim_thompson5910
    • one year ago
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    go ahead

  3. anonymous
    • one year ago
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    I know the equation is the final value - initial investment/initial investment

  4. anonymous
    • one year ago
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    however when i calculated the initial investment for this assignment i got that it was 6694

  5. anonymous
    • one year ago
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    now i am having complications calculating the final value bc it is not stated here

  6. jim_thompson5910
    • one year ago
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    ok post the problem so I can have a look

  7. anonymous
    • one year ago
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    I know that I have to use the compund interest formula

  8. anonymous
    • one year ago
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    the principal value would be the 6694 but i am not sure how am i supposed to plug in the rest

  9. anonymous
    • one year ago
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    and its a file though bc the students have to look for the information at a website called the nyse and i am doing research on the coca cola company @jim_thompson5910

  10. jim_thompson5910
    • one year ago
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    a text file? or something like it?

  11. anonymous
    • one year ago
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  12. anonymous
    • one year ago
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    i am not sure if this will help https://www.nyse.com/quote/XNYS:KO

  13. anonymous
    • one year ago
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    take a look at it @jim_thompson5910

  14. jim_thompson5910
    • one year ago
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    ok reading now

  15. jim_thompson5910
    • one year ago
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    ok so you bought 200 shares in 1998 and sold them all in 2008 and you're trying to find the ROI, correct?

  16. anonymous
    • one year ago
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    yes sir

  17. jim_thompson5910
    • one year ago
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    assuming you bought the 200 shares at the closing price, you have the correct cost $33.47*200=$6694

  18. anonymous
    • one year ago
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    yup

  19. jim_thompson5910
    • one year ago
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    now also assume you sell the 200 shares at the closing price in 2008 closing price per share = $30.93 30.93*200 = 6,186

  20. anonymous
    • one year ago
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    is that roi?

  21. jim_thompson5910
    • one year ago
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    \[\Large \text{ROI} = \frac{\text{Total Revenue} - \text{Total Cost}}{\text{Total Cost}}\] \[\Large \text{ROI} = \frac{6186 - 6694}{6694}\] \[\Large \text{ROI} = \frac{-508}{6694}\] \[\Large \text{ROI} \approx -0.07588885569167\] The negative ROI means that you lost money. So this is a bad investment. Of course, the decision to sell when the price per share in 2008 is lower than the price per share in 1998, is the reason why this is a bad decision.

  22. anonymous
    • one year ago
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    Can you help me do the same for todays investment

  23. jim_thompson5910
    • one year ago
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    notice how it says "High:$31.36" so there is no way to get a positive ROI if you sell the shares in 2008

  24. jim_thompson5910
    • one year ago
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    recall that the stock market sharply plunged in 2008, so selling stocks would have made a negative ROI on many stocks

  25. anonymous
    • one year ago
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    that is true

  26. jim_thompson5910
    • one year ago
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    June 22, 2015 Close:$40.48 Assume you sell the shares at the closing price

  27. jim_thompson5910
    • one year ago
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    Revenue = (# of shares)*(price per share) = 200*40.48 = 8,096

  28. jim_thompson5910
    • one year ago
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    what ROI do you get?

  29. anonymous
    • one year ago
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    8096-6694/6694

  30. jim_thompson5910
    • one year ago
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    Yep \[\Large \text{ROI} = \frac{\text{Total Revenue} - \text{Total Cost}}{\text{Total Cost}}\] \[\Large \text{ROI} = \frac{8096 - 6694}{6694}\] \[\Large \text{ROI} = ???\]

  31. anonymous
    • one year ago
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    0.2094412907

  32. jim_thompson5910
    • one year ago
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    correct, so you made some money if you sold in 2015 (in contrast to 2008 where you lost money)

  33. anonymous
    • one year ago
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    thank you so much jim

  34. jim_thompson5910
    • one year ago
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    no problem

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