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Suppose you purchased a share of stock for $50 one year before, sold it today for $60, and throughout the year received 3 dividend payments totalling $2.7, compute the following.

i) income

ii) capital gain(or less)

iii) total return

(1) in dollars

(2) as a percentage of the initial investment Q4.2

2) Two investments present the series of cash payments over 4 years, as given in the table below:

                         year1     year2    year3     year4
Investment:  1    $100       $200    $300      $400
                    2    $250       $250     $250     $250

i) Compute the total amount of money paid by each investment over 4 years?

ii) From a time value of money perspective, which of these investments is more favourable?

iii) Can you think of a cause why investors might favour investment 1?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914070

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