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Assume that inflation is 2.4% APR, compounded monthly 5. Your uncle gave you 1000 shares of Tesla at $4 per share on your birthday 10
Assume that inflation is 2.4% APR, compounded monthly 5. Your uncle gave you 1000 shares of Tesla at $4 per share on your birthday 10 years ago. Each share is now worth $715 and you just cashed out your stake in Tesla. What is your average annual return on Tesla shares over the past 10 years? [4] a. b. You want to thank your uncle, but you also want to enjoy the fruits of his generosity. Because your uncle loves cars, you'd like to buy him a Tesla today. You want to make sure that with the money left over, you can generate $50,000 of annual income for 70 years, starting this year. If your opportunity cost of capital is 8%, can you buy your uncle a $75,000 Tesla Model S, or will you only be able to offer him a $35,000 Tesla Model 3? (Your uncle lives in Oregon: there is no sales tax there so you can ignore taxes.) [8]
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