stanford case study analysis for Dummies
stanford case study analysis for Dummies
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e. CAGR (compound normal growth return). A money investor is really keen on the net return acquired calendar year soon after yr, So utilization of geometric is much more correct. Consequently we might use geometric ordinary for threat free amount and risk premium for each in the three divisions, as given in show 5 of your case.
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Usage of returns could be both arithmetic common or geometric average but geometric typical is much more acceptable then arithmetic regular as arithmetic common is reflecting easy return more than a stretch of time on Original investment, regardless of the funds obtain from period to interval. Nonetheless, geometric common shows compound return, which makes stability of investment decision price of former calendar year a basic principle base for calculation of following 12 months’s return i.
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