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Your client has asked for your advice on the following two investments. Purchase 2,000 shares of common stock or receive real-estate income as follows (year
Your client has asked for your advice on the following two investments. Purchase 2,000 shares of common stock or receive real-estate income as follows (year end): End of Year Real Estate Cash Flow $38,155 $48,020 $92,100 The common stock pays no dividends for three years, it is anticipated that the firm will begin paying a $3 dividend in the fourth year and the dividend will grow at 6.6%. Irrvestors demand a 10% return from this stock. The real estate irrvestment yields 14%. What is the value of each of the investments and which investment is better
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