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Question 16 Not yet answered Points out of 1 The treasurer of ABC Imports expects to invest $3,000 of the firm's funds in a long-term investment vehide at the end of each month for the next 5 years
Question 16 Not yet answered Points out of 1 The treasurer of ABC Imports expects to invest $3,000 of the firm's funds in a long-term investment vehide at the end of each month for the next 5 years. He expects that the company will earn 6% Interest that will compound monthly. The value that these payments should have at the end of the 5-year period is calculated as Flag question Select one O a $209,310.09 Ob $272,103.12 Oc $141,284.31 O d. $195,356.09 Oe. $317.390.58 Question 17 Not yet An issue of common stock is expected to pay a dividend of $4.80 at the end of the coming year. Its growth rate is equal to 8%. If the required rate of return is 13%, what is its current price? answered Points out of 1 Flag question Select one: O A $103.68 O B. $36.92 O C. $96.00 O D. none of the above riskiness of a particular security would NOT affect
Expert Solution
1. Usse FV function in EXCEL to find the accumulated value
=FV(rate,nper,pmt,pv,type)
rate=6%/12=0.5%
nper=5 years*12=60
pmt=3000
pv=0
=FV(0..5%,60,-3000,0,0)=209,310.09
Option a is correct
2. Value of Stock=Expected dividend/(required rate of return-growth rate)=4.8/(13%-8%)=96.0
Option C is correct
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