Ask Question
2 September, 01:46

an investment that in today's dollars returns 12% of your investment in year 1, 18% in year 2, 11% in year 3, and the remainder in year 4. Rounded to two places, what is the Duration of this investment

+4
Answers (1)
  1. 2 September, 04:11
    0
    3.17 years

    Explanation:

    We can calculate the duration of Investment by duration formula,

    Duration = Sum of (PV of each cashflow x year)

    PV of each cash flow can be understood as Dolar return % given in the Question.

    Year1 Year2 Year3 Year4

    Duration = (12% x 1) + (18% x 2) + (11% x 3) + (59% x 4)

    Duration = 0.12 + 0.36 + 0.33 + 2.36

    Duration = 3.17 years

    Note: (100%-12%-18%-11%) 59% can be calculated as the remainder of 100% after deducting each year's %.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “an investment that in today's dollars returns 12% of your investment in year 1, 18% in year 2, 11% in year 3, and the remainder in year 4. ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers