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An individual has $50,000 to invest. The government treasury bills (T-bills) pay 2.5% interest per year. She considers investing in the stock parket instead, by
An individual has $50,000 to invest. The government treasury bills (T-bills) pay 2.5% interest per year. She considers investing in the stock parket instead, by buying a stock that now sells for $45 each and pays an anuual dividend of $8/per stock. She thinks that after 6 years the stock will be selling for $65 each. What is the rate of return of the stock investment and is it a better deal than the T-bills?
-draw all cash flow diagrams
-please explain everything in detail, thank you!
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