A man purchased a share or stock for P135 six years ago and has received a dividend of P6 at the end of each year. If he sold the share for P120 today, at what rate of return could he consider that he has been paid interest. Assuming that he have re-invested such interest at 4% compounded annually?

A man purchased a share or stock for P135 six years ago and has received a dividend of P6 at the end of each year. If he sold the share for P120 today, at what rate of return could he consider that he has been paid interest. Assuming that he have re-invested such interest at 4% compounded annually?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Show your complete solution. 4. A man purchased a share or stock for P135 six years ago and has received a dividend of P6 at the end of each year. If he sold the share for P120 today, at what rate of return could he consider that he has been paid interest. Assuming that he have re-invested such interest at 4% compounded annually?

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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