Question 1: Suppose you buy 100 shares of Abolishing Dividend Corporation at the beginning of year 1 for $80. Abolishing Dividend Corporation pays no dividends. The stock price at the end of year 1 is $100, $120 at the end of year 2, and $150 at the end of year 3. The stock price declines to $100 at the end of year 4, and you sell your 100 shares. For the four years, your geometric average return is

Question 2: Suppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of year 1 for $36. At the end of year 1, you receive a $2 dividend and buy one more share for $30. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share) and sell the shares for $36.45 each. The time-weighted return on your investment is:

I have the answer for both questions, but the methodology is confusing. Could someone please explain?

First question 1, the formula is simple (Current Price Purchase Price) / (Purchase Price) to find the return in that year and then ((Return in Year 1) * (Return in Year 2)) ^ 1/n

So why for Question 2 does this formula change? It appears to be (Purchase Price + Dividend Current Price) / (Current Price)???

Very confusing!!

Please help and explain where I am going wrong thank you so much in advance!