## anonymous one year ago Can someone help me determine the ROI?

1. anonymous

@jim_thompson5910

2. jim_thompson5910

3. anonymous

I know the equation is the final value - initial investment/initial investment

4. anonymous

however when i calculated the initial investment for this assignment i got that it was 6694

5. anonymous

now i am having complications calculating the final value bc it is not stated here

6. jim_thompson5910

ok post the problem so I can have a look

7. anonymous

I know that I have to use the compund interest formula

8. anonymous

the principal value would be the 6694 but i am not sure how am i supposed to plug in the rest

9. anonymous

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

a text file? or something like it?

11. anonymous

12. anonymous

i am not sure if this will help https://www.nyse.com/quote/XNYS:KO

13. anonymous

take a look at it @jim_thompson5910

14. jim_thompson5910

15. jim_thompson5910

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

yes sir

17. jim_thompson5910

assuming you bought the 200 shares at the closing price, you have the correct cost $33.47*200=$6694

18. anonymous

yup

19. jim_thompson5910

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 is that roi? 21. jim_thompson5910 $\Large \text{ROI} = \frac{\text{Total Revenue} - \text{Total Cost}}{\text{Total Cost}}$ $\Large \text{ROI} = \frac{6186 - 6694}{6694}$ $\Large \text{ROI} = \frac{-508}{6694}$ $\Large \text{ROI} \approx -0.07588885569167$ 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 Can you help me do the same for todays investment 23. jim_thompson5910 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

recall that the stock market sharply plunged in 2008, so selling stocks would have made a negative ROI on many stocks

25. anonymous

that is true

26. jim_thompson5910

June 22, 2015 Close:\$40.48 Assume you sell the shares at the closing price

27. jim_thompson5910

Revenue = (# of shares)*(price per share) = 200*40.48 = 8,096

28. jim_thompson5910

what ROI do you get?

29. anonymous

8096-6694/6694

30. jim_thompson5910

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

0.2094412907

32. jim_thompson5910

correct, so you made some money if you sold in 2015 (in contrast to 2008 where you lost money)

33. anonymous

thank you so much jim

34. jim_thompson5910

no problem