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%
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 |