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

Algebra ->  Customizable Word Problem Solvers  -> Finance -> 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      Log On

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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) About Me  (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.