SOLUTION: ASSUME YOU HAVE $165,000 INVESTED IN A STOCK THATS RETURNING 11.50%, $85,000 INVESTED IN A STOCK THAT IS RETURNING 22.75% & $235,000 INVESTED IN A STOCK THATS RETURNING 10.25%. WHA

Question 69657: ASSUME YOU HAVE $165,000 INVESTED IN A STOCK THATS RETURNING 11.50%, $85,000 INVESTED IN A STOCK THAT IS RETURNING 22.75% & $235,000 INVESTED IN A STOCK THATS RETURNING 10.25%. WHATS THE EXPECTED RETURN OF YOUR PORTFOLIO?
A. 10.0%
B. 12.9%
C. 14.8%
D. 15.6%
I COME UP WITH 10.86%, BUT THATS NOT CORRECT, CAN YOU PLEASE SHOW THE WORK SO I WILL HAVE IT FOR FUTURE USE. ALSO, TELL ME HOW TO FIND THIS INFO USING MY TX INSTRUMENTS CALCULATOR, I DONT GET THIS, PLEASE HELP.
Answer by bucky(2189) (Show Source): You can put this solution on YOUR website!
It probably is more educational to think about this problem rather than to worry about how to get it into a calculator. [What model TI calculator would make a difference in the approach.]
At the end of the year if you want to know what your return on investment is ... how would you do it. You just need to understand that the rate of return is the total dollar amount of interest you made divided by the total dollars you had invested.
You had three investments as follows: $165,000 + $85,000 + $235,000. The total of these invested amounts is $485,000.
Because of the different rates of return on each investment, you have to calculate the interest you get for each individual investment.
Investment 1 of $165,000 has a rate of return of 11.5% of the investment. This return is ($165,000 * 0.115) and it equals $18,975 of interest.
Investment 2 of $85,000 has a rate of return of 22.75% of the investment. This return is ($85,000 * 0.2275) and it equals $19,337.50 of interest.
Investment 3 of $235,000 has a rate of return of 10.25% of the investment. This return is ($235,000 * 0.1025) and it equals $24,087.50 of interest.
This means your total return for the year is the sum of $18,975.00 + $19,337.50 + 24,087.50 and this is equal to $62,400.
As we said previously the rate of return for the entire year is the total interest earned ($62,400) divided by the total invested ($485,000). If you do the division you find that the answer is 0.12865979 which converts to 12.866% and rounds further to 12.9%. Answer B is the correct answer.
Hope this helps you grasp the fundamentals of the problem.
RELATED QUESTIONS
1286 ASSUME YOU HAVE $165,000 INVESTED IN A STOCK THATS RETURNING 11.50%, $85,000... (answered by checkley75)

Two stock investments cost $15 000. One stock then had a 40% gain and the other a 10%... (answered by KnightOwlTutor)

Juan invested $24,000 into two stocks. The first stock paid a 4% dividend and the second... (answered by greenestamps)

Hello - I need assistance. I have a problem that I can't seem to figure out; please see... (answered by stanbon,neatmath,DrBeeee)

You have already invested $550 in a stock with an annual return of 11%. How much more... (answered by stanbon)

A private investment club has $500,000 earmarked for investment in stocks. To arrive at... (answered by Theo)

Stock X, Stock Y, and the market have had the following returns over the past four years. (answered by solver91311)

Sarah Myers has $31,000 invested in stock A and stock B. Stock A currently sells for $50... (answered by josmiceli)

Bisi invested $245,000 in 7% stock at $98 and sold the stock when it's price rose to... (answered by ewatrrr)