Question
1) A peculiar stock has alternated between earning a 9.1% rate of return and a -6.3% rate of return (loss) every 6 months for 5
1) A peculiar stock has alternated between earning a 9.1% rate of return and a -6.3% rate of return (loss) every 6 months for 5 years total. What was the total rate of return over these 5 years? ANSWER TO 4 DECIMALS PLEASE
2) A perpetuity will pay cash flows of $45.56, in real dollars, every year indefinitely starting next year. If the prevailing nominal interest rate is 5.8%, and the inflation rate is 3% (both forever), what is the present value of this perpetuity? ANSWER TO 4 DECIMALS PLEASE
Step by Step Solution
There are 3 Steps involved in it
Step: 1
1 To calculate the total rate of return over the 5year period we need to consider the alternating ra...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
