Question: An investor is thinking about buying some shares of Razortronics
An investor is thinking about buying some shares of Razortronics, Inc., at $75 a share. She expects the price of the stock to raise to $115 a share over the next three years. During that time, she also expects to receive annual dividends of $4 per share. Given that the investor’s expectations (about the future price of the stock and the dividends it pays) hold up, what rate of return can the investor expect to earn on this investment? (Hint: Use either the approximate yield formula or a financial calculator to solve this problem.)
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