Assume that over the next ve years the returns on the S&P 500 index are 6%, 2.5%, 4%, 5.2%, and 3.1%. (a) What will be the cumulative wealth per dollar invested in this index? (b) At what compound annual rate of return did your money grow if you invested in this index at the start of the ve years?
Assume that the information generated above is all the information you have about McDonald’s rate of return. What would be the best estimate of the TR for McDonald’s for 2011? What was the actual return?