Indecisive about which stock to buy

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Reference no: EM132050653

You are indecisive about which stock to buy. Microsoft, which is selling for $96 a share; or Apple, which is selling for $170 a share. Microsoft stock promises to pay annual dividends of $4.50, $5.00, and $5.50 over the next three years respectively, and you estimate it can be sold for $110 at the end of the third year. You expect Apple to pay a dividend of $10.50 the first year, $11.50, and $12.50 over the next two years, respectively. You also expect Apple’s stock to be trading at $200 in three years. Which stock would you buy if stocks from computer manufacturers typically yield 10%?

Reference no: EM132050653

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