The following three defense stocks are to be combined into a stock index in January 2016 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500.

		Price
	Shares (millions)		1/1/16			1/1/17			1/1/18
Douglas McDonnell	425		$	72		$	75		$	92
Dynamics General	530			50			43			57
International Rockwell	310			79			68			85

a. Calculate the initial value of the index if a value-weighting scheme is used. (Round your answer to 2 decimal places.)

index value:

b. What is the rate of return on this index for the year ending December 31, 2016? For the year ending December 31, 2017? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

2016 return %:

2017 return %: