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Subject:FinancePrice:2.86 Bought3
A Moving to another question will save this response. 10 points Save Answer You inherited $300,750 and invested it at 6.25% per year. How much could you withdraw at the beginning of each of the next 15 years? a. $32,443. b. $24,020. C. $25,522. d. $29,622. e. $23,035.
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| 1] | Yearly withdrawals = 300750*0.0625*1.0625^15/((1.0625^15-1)*1.0625) = | $ 29,622 |
| Answer: [d] $29,622 | ||
| 2] | Required return on the stock per CAPM = 2.25%+1.3*5.10% = | 8.88% |
| Current stock price per constant dividend growth formula = 0.65*1.0475/(0.0888-0.0475) = | $ 16.49 | |
| Answer: [d] $16.49 |
