Your bank account pays an interest rate of 5 percent. You are considering buying a share of stock in XYZ Corporation for $100. After 1, 2, and 3 years, it will pay a dividend of $3. You expect to sell the stock after 3 years for $110. XYZ is a good investment.

Your bank account pays an interest rate of 5 percent. You are considering buying a share of stock in XYZ Corporation for $100. After 1, 2, and 3 years, it will pay a dividend of $3. You expect to sell the stock after 3 years for $110. XYZ is a good investment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Your bank account pays an interest rate of 5 percent. You are considering buying a share of stock in XYZ Corporation for $100. After 1, 2, and 3 years,
it will pay a dividend of $3. You expect to sell the stock after 3 years for $110.
XYZ is
a good investment.

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