How to Calculate Annualized Rate of Return

A pediatrician buys a company ABC stock at a price of $10 per share. Her total outlay is $10,000 She holds the stock for a period of five years. Unfortunately as dropped in value to $6 per share The portfolio is now only worth $6,000. To calculate her nominal returns the formula is  $6,000 minus 10,000 which is negative $4,000 Now notice it's not 30% because her total return is 60% over two years So the annualized rate of return I was actually quite surprised to find out was only 26%. When calculating returns of various investments you need to make sure the same time period is then taken into account