An engineer working for GE invested his bonus money each year in company stock. His bonus has been $5000 each year for the past 6 years (i.e., at the end of years 1 through 6). At the end of year 7, he sold $9000 worth of his stock to remodel his kitchen (he didn’t purchase any stock that year). In years 8 through 10, he again invested his $5000 bonus. The engineer sold all his remaining stock for $50,000 immediately after the last investment at the end of year 10. (a) Determine the number of possible rate of return values in the net cash flow series. (b) Find the internal rate of return(s). (c) Determine the composite rate of return. Use a reinvestment rate of 20% per year.
An engineer working for GE invested his bonus money each year in company stock. His bonus has been $5000 each year for the past 6 years (i.e., at the end of years 1 through 6). At the end of year 7, he sold $9000 worth of his stock to remodel his kitchen (he didn’t purchase any stock that year). In years 8 through 10, he again invested his $5000 bonus. The engineer sold all his remaining stock for $50,000 immediately after the last investment at the end of year 10. (a) Determine the number of possible
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images