Could you please complete in Excel and if possible Time Value of Money. Thank yo
ID: 1172636 • Letter: C
Question
Could you please complete in Excel and if possible Time Value of Money. Thank you 1: A stock cost $80 and pays a $4 dividend each year for three years. If an investor buys the stock for $80 and expects to sell it for $100 after three years, what is the anticipated annual rate of return? What would be the rate of return if the purchase price was $60? What would be the rate of return if the dividend were $1 annually and the purchase price were $80 and the sale price S100? 1) 2) 3) 2: You purchase a stock for $100 that pays an annual dividend of $5.50. At the beginning of the second year, you purchase an additional share of $1.30. At the end of the second year, you'll sell shares for $1.40. Determine the dollar weight return and the time-weighted compounded (i e geometric) return on this investment. Repeat the process but assume that the second share was purchased for $110 instead of $130. Why do the rates of return differ?Explanation / Answer
Using time value of money method
Price paid=$80, dividend=$4
Sold at $100
The rate of Return= profit=100-80=$20
additional dividend payments=$12
Total profit on invesment=$32
Profit on investment=112/80-1
=40% total return
Annual return=13.33%
2)Price =$60
Return on Investment=112/60 -1
=86.66%
Annual return=28.886%
3)Price = 80
Dividend=$1
Return on Investment=103/80 -1
=28.75%
Annual return=9.85%
Question 2