2) Dividend growth rate is important to many investors. You are considering inve

Question

2) Dividend growth rate is important to many investors. You are considering investing in a firm after looking at
the firm's dividends over a seven-year period. At the end of the year 2002, the firm paid a dividend of $1.35. At
year-end 2009, it paid a dividend of $1.84. What was the average annual growth rate of dividends for this firm?
2) _______

A) 4.52%
B) 7.25%
C) 6.94%
D) There is not enough information to answer this question.

3) In 1930, the highest paid player in major league baseball was Babe Ruth of the New York Yankees, with an
annual salary of $80,000. In 2000, the highest paid player in major league baseball player was Alex Rodriguez,
also of the New York Yankees, with a salary of $25,000,000. What was the average annual rate of growth in the
top baseball salary over this time period? 3) _______

A) 18.70% B) 4.17% C) 7.96% D) 8.55%

4) Your employer has agreed to place year-end deposits of $1,000, $2,000 and $3,000 into your retirement
account. The $1,000 deposit will be one year from today, the $2,000 deposit two years from today, and the
$3,000 deposit three years from today. If your account earns 7% per year, how much money will you have in
the account at the end of year three when the last deposit is made? 4) _______

A) $6,202.50 B) $6,000 C) $6,727.88 D) $6,284.90

5) The furniture store offers you no-money-down on a new set of living room furniture. Further, you may pay
for the furniture in three equal annual end-of-the-year payments of $1,100 each with the first payment to be
made one year from today. If the discount rate is 6%, what is the present value of the furniture payments?
5) _______

A) $2,940.31 B) $2,673.01 C) $3,183.60 D) $3,000.00

Explanation / Answer

3) In 1930, the highest paid player in major league baseball was Babe Ruth of the New York Yankees, with an
annual salary of $80,000. In 2000, the highest paid player in major league baseball player was Alex Rodriguez,
also of the New York Yankees, with a salary of $25,000,000. What was the average annual rate of growth in the
top baseball salary over this time period

7.96%. answer

Using a financial calculator, PV 80,000, FV 25,000,000, N 75. Solve for R of 7.96%. answer

The formula for the PV of $1: 1 / (1 + r)^n, 1 / 1.0796^75, or 1 / 312.4033565 = .0032
The PV of 25,000,000 = 25,000,000 x .0032 = 80,000

4) Your employer has agreed to place year-end deposits of $1,000, $2,000 and $3,000 into your retirement
account. The $1,000 deposit will be one year from today, the $2,000 deposit two years from today, and the
$3,000 deposit three years from today. If your account earns 7% per year, how much money will you have in
the account at the end of year three when the last deposit is made? 4) _______
$1,000 * 1.05^2 + $2,000 * 1.05 + $3,000 =6,202.50
A) $6,202.50 answer

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.