Can someone help me determine the ROI?

- anonymous

Can someone help me determine the ROI?

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- anonymous

@jim_thompson5910

- jim_thompson5910

go ahead

- anonymous

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

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## More answers

- anonymous

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

- anonymous

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

- jim_thompson5910

ok post the problem so I can have a look

- anonymous

I know that I have to use the compund interest formula

- anonymous

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

- 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

- jim_thompson5910

a text file? or something like it?

- anonymous

##### 1 Attachment

- anonymous

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

- anonymous

take a look at it @jim_thompson5910

- jim_thompson5910

ok reading now

- 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?

- anonymous

yes sir

- jim_thompson5910

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

- anonymous

yup

- 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

- anonymous

is that roi?

- 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.

- anonymous

Can you help me do the same for todays investment

- 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

- jim_thompson5910

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

- anonymous

that is true

- jim_thompson5910

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

- jim_thompson5910

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

- jim_thompson5910

what ROI do you get?

- anonymous

8096-6694/6694

- jim_thompson5910

Yep
\[\Large \text{ROI} = \frac{\text{Total Revenue} - \text{Total Cost}}{\text{Total Cost}}\]
\[\Large \text{ROI} = \frac{8096 - 6694}{6694}\]
\[\Large \text{ROI} = ???\]

- anonymous

0.2094412907

- jim_thompson5910

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

- anonymous

thank you so much jim

- jim_thompson5910

no problem

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