Question: 1 . John buys a stock for $ 7 , 0 0 0 which he sells for $ 8 , 0 0 0 after holding

1. John buys a stock for $7,000 which he sells for $8,000 after holding it for 4 years. He received an annual dividend of $300 which was paid to him semi-annually. He reinvested the dividends after they were received in a GIC earning 3%. His marginal tax rate on dividends is 19% and on regular income is 36%. Inflation averaged 2% throughout his holding period. What was Johns after-tax EAR?

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