Hey guys, It is asking for the required return for the next year while giving the expenses for last year, I compounded twice while the key answer shows a compounding only once. I would have compounded only once if it asked for the required return for the current year and not the next year. Do you see what I mean? Any ideas? Thanks! M.
any input? thanks! M.
no you would not compound twice. Annual expenses last year were given as $150,000 and will increase at inflation rate of 2%. “Last year” -> most recent year, imagine it’s December 31 if this helps… there are only two years, and they are sequential, “last year” and “coming year”, such as 2010 = “last year” and 2011 = “coming year.”
thanks!