What is the rate of return of the stock investment

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Reference no: EM131991154

An individual has $50,000 to invest. The government treasury bills (T-bills) pay 3.5% interest per year. She considers investing in the stock parket instead, by buying a stock that now sells for $135 each and pays an anuual dividend of $12/per stock (Dividend=amount of profits that the company that sells the stock pays to the stockholders every year). She thinks that after 5 years the stock will be selling for $155 each. What is the rate of return of the stock investment and is it a better deal than the T-bills?

Reference no: EM131991154

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