David spent $625 on 30 shares in a software company. Aftor six months, the valuos of his stocks are worth $4,762.80, David's dividend yield during this period is 1.95% (a) How much dividend per share did the company pay David? Dividend per share i : (b) David solls his shares at the $4,762.80 price. The brokerage is 3.5% of the sale. What net profit does he make from the shares? ProfitS (c) David invests his profits into an account earning interest at 1% per annum, compounded quarterly. He intends to make quarterly withdrawals over 6 years, atter which the account will be empty, Use the present valué of an annuity of $1 table below to find how much David will be able to withdraw each quarter, to the nearest cent. Present Value of an Annuity of $1 Interest Rate per period 1.00% 5.8456 2.50% 5.6972 1.50% 2.00% 5.7460 Periods 0.50% 0.25% 5.9478 6. 5.8964 5.7955 11.4349 16.7792 21.8891 11.2551 16.3983 21.2434 11.0793 16.0295 20.6242 24.8889 28.8473 10.9075 15.6726 20.0304 12 11.8073 11.6189 18 17.5795 17.1728 24 23.2660 22.5629 26.7751 25.8077 24.0158 27.7941 32.8710 30 28.8679 36 34.3865 31.4468 30.1075 27.6607 39.8230 37.7983 35.9137 34.1581 32.5213 30.9941 42
David spent $625 on 30 shares in a software company. Aftor six months, the valuos of his stocks are worth $4,762.80, David's dividend yield during this period is 1.95% (a) How much dividend per share did the company pay David? Dividend per share i : (b) David solls his shares at the $4,762.80 price. The brokerage is 3.5% of the sale. What net profit does he make from the shares? ProfitS (c) David invests his profits into an account earning interest at 1% per annum, compounded quarterly. He intends to make quarterly withdrawals over 6 years, atter which the account will be empty, Use the present valué of an annuity of $1 table below to find how much David will be able to withdraw each quarter, to the nearest cent. Present Value of an Annuity of $1 Interest Rate per period 1.00% 5.8456 2.50% 5.6972 1.50% 2.00% 5.7460 Periods 0.50% 0.25% 5.9478 6. 5.8964 5.7955 11.4349 16.7792 21.8891 11.2551 16.3983 21.2434 11.0793 16.0295 20.6242 24.8889 28.8473 10.9075 15.6726 20.0304 12 11.8073 11.6189 18 17.5795 17.1728 24 23.2660 22.5629 26.7751 25.8077 24.0158 27.7941 32.8710 30 28.8679 36 34.3865 31.4468 30.1075 27.6607 39.8230 37.7983 35.9137 34.1581 32.5213 30.9941 42
Chapter5: The Cost Of Money (interest Rates)
Section: Chapter Questions
Problem 6PROB
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Transcribed Image Text:David spent $625 on 30 shares in a software company. After six months, the values of his stocks are
worth $4,762.80, David's dividend yield during this period is 1.95%,
(a) How much dividend per share did the company pay David?
Dividend per share is
(b) David sells his shares at the $4,762.80 price. The brokerage is 3.5% of the sale. What net profit
does he make from the shares?
ProfiteS
(c) David invests his profits into an account earning interest at 1% per annum, compounded quarterly.
He intends to make quarterly withdrawals over 6 years, atter which the account will be empty, Use the
present value of an annuity of $1 table below to find how much David will be able to withdraw each
quarter, to the nearest cent.
Present Value of an Annuity of $i
Interest Rate per period
1.00%
1.50%
2.00%
2.50%
5.6972
Periods
0.25%
5.9478
0.50%
5.8964
5.8456
5.7955
5.7460
10.9075
15.6726
11.4349
11.2551
11.0793
11.6189
17.1728
22.5629
12
11.8073
18
17.5795
16.7792
16.3983
16.0295
24
23.2660
21.8891
21.2434
20.6242
20.0304
25.8077
30.1075
24.0158
27.6607
26.7751
24.8889
27.7941
32.8710
30
28.8679
36
34.3865
31.4468
28.8473
39.8230
37.7983
35.9137
34.1581
32.5213
30.9941
42
David will be able to withdraw $
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