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PROBLEM 10 BELOW ARE THE SHARE PRICES BY DATE FOR TWO COMPANIES: THE YOUNG CORPORATION AND THE MATURE CORPORATION THE YOUNG CORPORATION GROWS RAPIDLY AND

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PROBLEM 10 BELOW ARE THE SHARE PRICES BY DATE FOR TWO COMPANIES: THE YOUNG CORPORATION AND THE MATURE CORPORATION THE YOUNG CORPORATION GROWS RAPIDLY AND RETAINS ALL ITS PROFITS (DOES NOT PAY DIVIDENDS). THE MATURE CORPORATION IS CURRENTLY NOT GROWING BUT GENERATES SIZABLE CASH FLOWS, AND PAYS OUT DIVIDENDS AS SHOWN BELOW a) CALCULATE BOTH YOUNG'S YEARLY RETURNS AND MATURE'S YEARLY RETURNS. BE SURE TO INCLUDE THE DIVIDENDS WITH THE RETURNS FOR THE MATURE CORPORATION. Young Corp. Mature Corp. Dividend per share 0.00 0.00 1.00 0.00 1.50 1.50 0.00 2.00 2.00 0.00 Share price Share price 31-Dec-05 31-Dec-06 31-Dec-07 31-Dec-08 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 32.56 34.50 38.98 44.50 40.20 39.50 38.45 37.50 43.58 50.30 78.50 82.50 84.50 81.60 79.60 80.96 82.65 83.69 82.79 81.97 b) WHICH CORPORATION IS THE BETTER INVESTMENT OF THE TWO CORPORATIONS? question a & b

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