In: Finance
1a) You have an opportunity to invest $25000 today and receive $35000 in 4 years. What is the expected annual return in percentage terms (or yield)?
b) Regarding your answer in (a), please explain if your answer
has comprehended the effect of the investment’s value compounding
in value or whether you have used a methodology that ignores
compounding. In other words is your answer in (a) above a compound
return or not?
c) You invested $25000 in the ordinary shares of a company 4 years’
ago and received $3000 in dividends over those 4 years. The shares
today are worth $32000. What is the historical return (also called
holding period return) in percentage terms?