Compute the total and annual roturns on the described investment. Six years after buying 50 shares of XYZ stock for $$ \$ 60 $$ per share, you sell the stock for $$ \$ 4300 $$, The total return is $$ 43.3 \% $$. (Do not round until the final answer. Then round to one decimal place as needed.) The annual return is $$ \square \% $$. (Do not round until the final answer. Then round to one decimal place as needed.) (D)

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You initially purchased 50 shares at $60 each, so your total initial investment was:

Initial Investment = 50 × $60 = $3000

After six years, you sold the shares for a total of $4300. The total return is calculated as:

Total Return = (Final Value / Initial Investment) – 1
  Total Return = ($4300 / $3000) – 1 = 1.4333 – 1 = 0.4333 or 43.3%

To compute the annual return (r), use the compound growth formula:

Final Value = Initial Investment × (1 + r)^years
  $4300 = $3000 × (1 + r)^6

Solve for (1 + r)^6:
  (1 + r)^6 = $4300 / $3000 = 1.4333

Now take the sixth root of both sides:
  1 + r = (1.4333)^(1/6)

Calculate r:
  r = (1.4333)^(1/6) − 1

Using a calculator:
  (1.4333)^(1/6) ≈ 1.06165

Thus:
  r ≈ 1.06165 − 1 = 0.06165

Converting to a percentage and rounding to one decimal place:
  r ≈ 6.2%

So, the annual return is 6.2%.
The total return is 43.3%. The annual return is 6.2%.

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