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1. You are considering purchasing 100 shares of stock in Big Money Company. You expect the stock to pay annual dividends of $950 at the
1. You are considering purchasing 100 shares of stock in Big Money Company. You expect the stock to pay annual dividends of $950 at the end of each year, and to be worth $82,000 at the end of ten years, when you plan to sell the stock. The investment costs $43,000 and you need an annual return of 7.4%. What is the net present value of this investment? Note: This is a standard net present value problem.
Based on your calculations, will the total return on the investment be at least 7.4%?
Circle one: Yes No
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