The common stock of Eddie's Engines, Inc., sells for $37.13 a share. The stock is expected to pay a dividend of $3.10 per share next year. Eddie's has established a pattern of increasing their dividends by 5.2 percent annually and expects to continue doing so. What is the market rate of return on this stock?

13.55%

Explanation:

The common stock of Eddies engines is sold at $37.13 per share

The stock is expected to make a payment of $3.10 per share next year

The growth rate is 5.2%

Therefore, the market rate of return on the stock can be calculated as follows

Market rate of return= Next dividend payment/stock price × growth rate

= $3.10/$37.13 + 5.2%

= 0.0835×100 + 5.2%

= 8.35%+5.2%

= 13.55%

Hence the market rate of return on this stock is 13.55%

Job A $65,000
-$5,416.66 Gross Income Monthly
-$95.00 Health Insurance
-$40.00 Life Insurance
-$666.66 Deduction for IRA per month

$4,615.00 Gross Income per month less deductions

Job B $64,000 Annual
-$5,333.33 Monthly Gross Income
--$105.00 Monthly Health Insurance
-$50.00 Monthly Life Insurance
-$666.66 Monthly IRA

$4,511.67 Monthly Gross left


Job A
$3,250 = 5% of $65,000
$8,000 + $3,250 = $11,250 paid into IRA each year

Job B
$5,760. 00 = 9% of $64,000
$8,000 + $5,760 = $13,760 paid into IRA EACH YEAR

So A pays $1,000 more per year , but B pays more into IRA of $2,510 extra per year.


There is no difference in health insurance other than 1 cost more than the other and the same applies to the life insurance.

When you retire, quit, or transfer jobs, then life insurance usually cancels, so no more life insurance and with health insurance may continue on the employers policy under (Cobra) which is $395 per month on A and $505.00 on B for up to 18 months.

The key is the IRA since you keep it till you retire in your own account, thus will have more money invested each year to accumulate to live on.