Again geometric returns reflect the impact of compounding. Next add all of the data point logarithms together and divide this sum by the number of data points n. You can also use the logarithmic functions on your calculator to solve the geometric mean if you want.
PV -initial investment FV initial investment 1 rate of return from year one 1 rate of return from year two.
This section is designed for you if youre alread y familiar with calculator operation or financial concepts. If you were to calculate this using the arithmetic mean return you would add the rates together and divide them by three giving you an average of 6. In other words take the average of the logs. Future value FV compounding periods N interest rate IY periodic payment PMT present value PV or starting principal.