Compute the Geometric Mean for the Following Data on Growth

question 3

Multiple Choice

Compute the geometric mean for the following data on growth factors of an investment for 10 years. 1.10, 0.50, 0.70, 1.21, 1.25, 1.12, 1.16, 1.11, 1.13, 1.22

• A)1.0221
• B)1.0148
• C)1.0363
• D)1.1475

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Definitions:

Accountant

A professional who performs accounting functions such as audits or financial statement analysis.

Present Value Factors

Numeric factors used to calculate the present value of future cash flows, taking into account a specific discount rate.

Compound Interest

Interest that is computed not only on the initial amount of the loan or deposit but also on any interest that has been added to this amount from earlier periods.

Cash Payback Period

The time it takes for a business to recover its investment in a project, through cash inflows.