Question: At the start of Year 1, you buy 1000 shares of stock at $225 a share; the stock currently pays $7.35 per share in quarterly

At the start of Year 1, you buy 1000 shares of stock at $225 a share; the stock currently pays $7.35 per share in quarterly dividends. Price of the stock grows as follows: by the end of Year 1, the stock is expected to be at $240.75, at the end of Year 2, the stock is expected to be at $249.18, at the end of Year 3 the stock will be expected to trade at $292.78, at the end of Year 4 it will be expected to reach $328.94 and by the end of Year 5 it will be $367.69. The company is targeting dividends growth at 6% per year.

What are the total returns from taking dividends in cash from holding the stock from the start of Year 1 through the end of Year 5?

What are the total returns if dividends are re-invested at the end of each year? Note: in the last year of holding (end of Year 5) you must take dividends for Year 5 in cash.

Express your answers in both, dollars and percentage terms. Report returns in gross (5-year) and annualized format. 

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