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Determine the rate of return during the two years

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Question - a) Kara a retail investor decided to purchase 10 shares of Company A at a per-unit price of $20. She holds onto share of Company A for 2 years. In that time frame, Company A paid yearly dividends of $1 per share. After holding them for 2 years, she decided to sell all 10 shares of Company A at a per-unit price of $25. Kara has asked you to determine the rate of return during the two years she owned the shares.

b) A firm is expected to earn $200 net income for the next year, at the end of which time the firm will be wound-up. The firm book value at the beginning of the year is $1200 and its cost of capital is 12%. What is the firm estimated market value at the beginning of the year?

c) Based on your answer in part (b) the information addresses biased or unbiased accounting?

Reference no: EM132892666

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