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#3 You buy a share of stock, and will receive the following cash flow therefrom: Time (yrs) Dividend Sale Total CF 1 2 3 4

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#3 You buy a share of stock, and will receive the following cash flow therefrom: Time (yrs) Dividend Sale Total CF 1 2 3 4 5 1.0000 1.0650 1.1342 1.2079 1.2865 1.3701 1.4591 1.5540 1.6550 1.0000 1.0650 1.1342 1.2079 1.2865 1.3701 1.4591 1.5540 1.6550 51.7626 6 7 8 9 10 1.7626 50.0000 Note: the dividends grow exponentially If you pay $30 for the share, what is your internal rate of return: effective annual rate i force of interest 8

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