Bob is thinking about investing $53 in a stock that he expects to pay dividends of...
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Bob is thinking about investing $53 in a stock that he expects to pay dividends of $3 in year 1, $4 in year 2, $5 in year 4. He expects to sell the stock immediately after receiving the final dividend for $50. Using the NPV formula decide whether or not this is a good plan. Start by listing your cash flows Year Cash Flow 0 $ 1 $ 2 $ 3 $ 4 $ (53.00) Correct 3.00 Correct 4.00 Correct 10.00 Incorrect 5.00 Incorrect Assuming a discount rate of 6%, compute NPV. NPV Should Bob invest in the stock? Yes/No ܕܟ Bob is thinking about investing $53 in a stock that he expects to pay dividends of $3 in year 1, $4 in year 2, $5 in year 4. He expects to sell the stock immediately after receiving the final dividend for $50. Using the NPV formula decide whether or not this is a good plan. Start by listing your cash flows Year Cash Flow 0 $ 1 $ 2 $ 3 $ 4 $ (53.00) Correct 3.00 Correct 4.00 Correct 10.00 Incorrect 5.00 Incorrect Assuming a discount rate of 6%, compute NPV. NPV Should Bob invest in the stock? Yes/No ܕܟ
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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