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10 October, 09:11

Damien plans to buy a share at $120 and hold it for five years. During this period, he would receive average annual dividends of $4 a share. He expects to receive S145 at the end of the five-year period when he sells the share. What are the keystrokes used to calculate the rate of return on the investment?

A. N - 5, PV - 120, PMT-4, FV 145

B. N = 5, PV = 120, PMT = 4, FV-145

C. N>5, PV=-145, PMT = -4, FV-120

D. N = 4, PV = -120, PMT-5, FV-145

E. Nr 4, PV-145, PMT = 5, FV-.120

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Answers (1)
  1. 10 October, 09:13
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    N=5, PV=-120, PMT=4, FV=145

    Explanation:

    In this question, we use the Rate formula which is shown in the spreadsheet.

    The NPER represents the time period.

    Given that,

    Present value = $120

    Assuming figure - Future value or Face value = $145

    PMT = 4

    NPER = 5

    The formula is shown below:

    = Rate (NPER; PMT; -PV; FV; type)

    The present value come in negative

    This is the answer and the same is not given in the options
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