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Basic concepts in Finance

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A. Mr. Darden sold his house for $165,000. He bought it for $55,000 nine years ago. What is the annual return on his investment?
B. An issue of common stock has just paid a dividend of $3.75. Its growth rate is 8%. What is its price if the market's rate of return is 16%?

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Solution Preview

Mr. Darden sold his house for $165,000. He bought it for $55,000 nine years ago. What is the annual return on his investment?

Current ...

Solution Summary

There are two problems. Solution to first problem describes the steps to calculate annual return in the given case. Solution to second problem estimates the current price of a stock.

$2.19