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**CFA Practice Question**

The U.S. Federal Aviation Administration reported that passenger revenues on international flights increased from $528 million in 1983 to $5,100 million in 2006.

What is the geometric mean annual percent increase in international passenger revenues?

A. 27.9

B. 9.96

C. 10.36

**Explanation:**There are 23 years involved. The geometric mean is = [(1 + (5100 - 528)/528)

^{1/23}] - 1 = 0.1036 = 10.36%

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**User Contributed Comments**
14

User |
Comment |
---|---|

ursula |
please help! not getting 10.36! thank you! |

ursula |
nevermind...used (1/23) for y^x on hp, not 23 1/x |

hannovanwyk |
PV= -528 FV= 5100 n= 23 Pmt= 0 i >>>>> 10.36 |

grezavi |
Nice trick hannovanwyk- forget the geometric return |

uviolet |
nice trick. thanks hannoanwyk |

adieu |
thanks hannovanwyk |

jpducros |
other solution : (1+ 5100/528)^1/24 -1 |

bkballa |
why is the number of yrs 23 and not 24? |

soukhov |
geometric mean = CAGR |

soukhov |
23 = from end to end 24 = from begginning to end revenues reported at the end -> 23 |

Procbaby1 |
528(1+x)^23=5100 |

santibanez |
Hp: 5100 enter 528/ 1 enter 23/y^x 1- |

cfastudypl |
Thanks hannovanwyk, very smart way of doing it, well done. |

paddock20 |
Thank you hannovanwyk |