An investor buys three shares of xyz at the beginning of 2010, buys another one shares at the beginning of 2011, sells one share at the beginning of 2012, and sells all three remaining shares at the beginning of 2013.
a. what are the arithmetic and geometric average time-weighted rates of return for the investor?

Dodge Charger SRT Hellcat: The Dodge Charger SRT Hellcat starts at $64,990. A consumer who wants to purchase this vehicle needs to consider the purchase price and monthly payments, and then look at fees associated with getting the car on the road. First, consider the purchase price of $64,990. The down payment is $10,000.The monthly payment at 5 percent interest would be $962 a month for 60 months (5 years). By the time the loan is paid in full, the car will no longer be worth what the consumer paid for it. A car loses value or depreciates over time. After five years, the car is worth only about 40 percent of the original purchase price. Now consider tax, tags, and title fees. For example, for a new vehicle priced at $50,000 and above in the state of Virginia, the sales tax is 4 percent. The title costs $10, and registration fees are $101. To purchase this vehicle, a consumer would need $2,710 in order to register the vehicle and get it on the road. Thus, the total price of this car would be $70,430 (down payment of $10,000 plus monthly payments total: $57,720 plus $2,710 for registration, etc. = $70,430).

A consumer who can’t afford to pay the $64,990 purchase price can look at leasing options. Leasing lasts for three years. The Hellcat will be worth 58 percent of its purchase price, for a residual value of $37,694. The lease will be for the difference between the purchase price and the residual value. Thus, the lease amount will be $64,990 – $37,694 = $27,396, with an interest rate of 5 percent. There is a $0 down payment, and the monthly lease payment is $799. Keep in mind that tax, tags, and title fees don’t exist for lease agreements. Thus, the total price of the lease is $28,766.

Purchasing the Hellcat would mean paying $70,430 after all the related fees and interests are paid. This is nearly $10,000 more than the purchase price of the vehicle. The only way this would be a reasonable financial arrangement is if the consumer purchasing the vehicle considers $70,430 to be a small cost compared to their annual earnings. The only other way this decision makes sense is if the car is maintained extremely well and the person can sell it at the end of five years for somewhere near the original purchase price. If this second scenario is possible, then the person is at an advantage. If the consumer who purchased the car can sell it for at least 65 percent of its original purchase price, then buying the car was a good idea. Leasing the Hellcat would mean paying $28,766 for the use of the car for three years. This sounds like a bargain, but there are downsides to the arrangement. At the end of three years, the consumer would need to make a new lease deal because they would be without a car.

After reviewing the two financing options for acquiring a Hellcat, it makes sense to lease the car because the lease amount is so much lower than the purchase price.

Explanation: Edmentum Answer. My version was calculating the lease, and owning payment, down payment, monthly payment, order payment, etc. In the end I said that I would own the car that I picked. Sorry if this doesn't help or make sense but I hope it does!