nase 100 snares of stock Tor $25 a snare. The stoCK pays a $1 per share dividend at year-end. a. What is the rate of return on your investment if the end-of-year stock price is (i) $24; (ii) $25; (iii) $28? (Leave no cells blank - be certain to enter "O" wherever required. Enter your answers as a whole percent.) Stock Price Rate of Return 24 % 25 28 %

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 5P
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You purchase 100 shares of stock for $25 a share. The stock pays a $1 per share dividend at year-end.
a. What is the rate of return on your investment if the end-of-year stock price is (i) $24; (ii) $25; (ii) $28? (Leave no cells blank - be
certain to enter "O" wherever required. Enter your answers as a whole percent.)
Stock Price
Rate of Return
24
%
25
%
28
%
b. What is your real (inflation-adjusted) rate of return if the inflation rate is 2%? (Do not round intermediate calculations. Enter your
answers as a percent rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.)
Stock Price
Real Rate of Return
24
%
25
%
28
%
Transcribed Image Text:You purchase 100 shares of stock for $25 a share. The stock pays a $1 per share dividend at year-end. a. What is the rate of return on your investment if the end-of-year stock price is (i) $24; (ii) $25; (ii) $28? (Leave no cells blank - be certain to enter "O" wherever required. Enter your answers as a whole percent.) Stock Price Rate of Return 24 % 25 % 28 % b. What is your real (inflation-adjusted) rate of return if the inflation rate is 2%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.) Stock Price Real Rate of Return 24 % 25 % 28 %
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