You are offered an investment that will pay you the cash flows shown in the table. The first cash flow occurs in one year. The cost of the investment is 1,086.59 (today).
What is the return on the investment?
Year Cash Flow
1 70
2 70
3 70
4 70
5 1,070
A) 5
B) 7
C) 9
D) 11
E) 13
Question 2
A share of common stock has a current price of 82.50 and is expected to grow at a constant rate of 10 percent. If you require a 14 rate of return, what is the current dividend of this stock?
A) 3.00
B) 3.30
C) 4.29
D) 4.75
E) 6.13