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12 September, 17:48

A couple bought some stock for $30 per share that pays an annual dividend of $0.90 per share. After 1 year the price of the stock was $33. Find the simple interest rate on the growth of their investment.

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  1. 12 September, 20:12
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    The simple interest rate will be found as follows:

    A=Pe^ (rt)

    where:

    A=$33

    P = (30+0.9) = $30.9

    t=1 year

    plugging into our formula we get:

    33=30.9e^ (r*1)

    33=30.9e^r

    1.067961=e^r

    introducing natural logs we get

    r=ln 1.06761

    r~0.06575

    Answer: 0.06575 or 6.575%
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