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You are investing $6,500 immediately in a stock that you will keep for 10 years. At the end of 10 years, the stock will be worth $14,433 with a probability of 0.56 and worth $17,322 with a probability of 0.44. When you sell the stock, you will need to pay taxes on the profit earned from selling the stock (i.e., taxes on the difference between the selling and buying prices of the stock). The tax rate will be 7% with a probability of 0.80 or 15% with a probability of 0.20. Your MARR is 6% What is the variance and standard deviation of the net present worth from investing in the stock?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92750488

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