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FIN 640 CHAPTER 1 Problem #3-4 and CHAPTER 2 Problem #4-5

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Question;3. At the beginning of last year, you invested $4,000 in 80 shares of the Change Corporation. During the year, Chang paid dividends of $5 per share. At the end of the year, you sold the 80 shares for$59 a share. Compute your total HPY on these shares and indicate how much was due to the price change and how much was due to the dividend income.4. The rates of return computed in Problems 1, 2, and 3 are nominal rates of returns. Assuming that the rate of inflation during the year was 4%, compute the realrates of return on these investments. Compute the real rates of return if the rate of inflation was 8%.CHAPTER 2 FIN640 Investment Analysis & Portfolio ManagementProblem #4-5Robert McAlister4 (a) Someone in the 36% tax bracket can earn 9% annually on her investments in tax-exempt IRA account. What will be the value of a one-time $10,000 investmentsin 5 years? 10 years? 20 years?4 (b) Suppose the preceding 9% return is taxable rather than tax-deferred and the taxes are paid annually. What will be the after-tax value of her $10,000 investment after 5, 10, and 20 years?5 (a) Someone in the 15% tax bracket can earn 10% on his investments in a tax-exempt IRA account. What will be the value of a $10,000 investment in 5 years? 10 years? 20 years?5 (b) Suppose the preceding 10% return is taxable rather than tax-deferred. What will be the after-tax value of his $10,000 investment after 5, 10, and 20 years?

 

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