Given the following information, calculate the equity dividend rate for this investment

Finance May 08, 2021

Given the following information, calculate the equity dividend rate for this investment. First-year N01: $18,750, Before-tax cash flow: $11.440, Acquisition price: $620.000, Equity Investment: 20%
9.2% 18.02% 3.6%

Expert Solution

Computation of Equity Dividend Rate:

Equity Dividend Rate = Before-tax Cash Flow / Equity Investment * 100

= 11440 / (620000 * 20%) * 100

= 11440 / 124000 * 100

Equity Dividend Rate = 9.23%

So, the correct option is 1st "9.2%".

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