Question: Mr. San some withdrew $1000 from a savings account and invested it in common stock . At the end of 5 years, he sold the

Mr. San some withdrew $1000 from a savings account and invested it in common stock. At the end of 5 years, he sold the stock and received a check for $1307. If Mr. Sansome had left his $1000 in the savings account, he would have received an interest rate of 5%, compounded quarterly. Mr. Sansome would like to compute a comparable interest rate on his common stock investment. Based on quarterly compounding, what nominal annual interest rate did Mr. Sansome receive on his investment in stock? What effective annual interest rate did he receive?

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Common Stock Investment P 1000 n 20 quarters i F 1307 F P FP i n 1307 1000 FP i 20 FP i 20 13071... View full answer

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