Calculate the arithmetic and geometric averages


Question: What variables are critical to determine if they should increase or decrease their dividend payout ratio? (Hint be specific what variables do you need to know.)Year Return 1 20% 2 25% 3 5% 4 10% Calculate the arithmetic and geometric averages. Which of the two measures provides a better indication of the return over the four-year period?

 

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Accounting Basics: Calculate the arithmetic and geometric averages
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