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Kevin owns one share of Acme, Inc. stock. He purchased the stock three years ago for $29. The stock is currently trading for $29.50 per share. The stock has paid the following dividends over the past three years. o Year 1: $1.50 o Year 2: $2.00 o Year 3: $2.50 What is the compounded rate of return (IRR) that Kevin has earned on this investment

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Answer:

Find below the multiple choices:

5.6%.

6.6%.

10.1%.

7.35%

The last option ,7.35% is correct

Explanation:

The excel IRR formula can be very useful in determining the IRR for the investment in stock, the formula is stated thus:

=IRR(values)

the values in the case are the cash flows (inflows and outflows) arranged from the earliest to the latest as shown in the attached spreadsheet.

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