An investor owns shares of XYZ stock that currently are worth $10,000. The stock is...
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Finance
An investor owns shares of XYZ stock that currently are worth $10,000. The stock is expected to generate dividends of 3.5% of its value each year, and to appreciate in value at an annual rate of 10%.
a. What is the investors expected pre-tax return on this investment?
b. Assuming the investor is subject to an ordinary income tax rate of 35% and a capital gains tax rate of 20%, what is the investors overall effective tax rate on this investment?
c. What is the investors expected after-tax percentage rate of return on this investment?
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