12. Mary wants to use $35,000 to buy an expensive piano. Through research, Mary

Question

12. Mary wants to use $35,000 to buy an expensive piano. Through research, Mary ha learned 7.o that this particular piano brand tends to appreciate in value at an average of 3.2% per year. Mary is thinking of the piano as an investment that can also be enjoyed. Mary's father has advised her to put her money into a stock that pays a $1.40 yearly dividend.The stock's price is currently at $26.60. Mary would like to examine each investment in an analytical way before making a final decision. How much better is the yield per year on the stock than on the piano? 2 our work here Answer 23

Explanation / Answer

Yield per year ( on stock) = 1.40 / 26.60 * 100 = 5.26%

That is for an investment of 26.60 we get 1.40 as dividend yield every year.

Yield per year ( on piano) = 3.2% ( given)

Excess yield with stock investment = 5.26 - 3.20 = 2.06% ....... final answer

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