3. Forecasting stock Understanding the Returns From Investing When buying stock, you can expect to earn money through future current income (from ). Together, your total earnings from a given investment can be expressed in terms of the appreciation (from approximate expected return. This value makes it easier for you to compare investment options. ) and future capital Understanding the Approximate Expected Return Equation The formula for the approximate expected return of an investment can look intimidating, but it's really just a function of three things: (1) average annual current income, (2) average capital gains, and (3) the average value of the investment. Based on the information in the table, compute each of these values for the two stocks over a 3-year period and enter the values into the bottom half of the table. Stock 1 Stock 2 Average annual dividends (over three years) $0.95 $2.65 Current stock price $60 $114 Projected future stock price (in three years) $75 $138 Average annual current income (CI) $ $ Average annual capital gains (CG) $ $ Average value of the investment (VI) $ the equation that follows.