Question

You bought a stock three years ago and paid $45 per share. You collected a $2 dividend per share each year you held the stock and then you sold the stock for $47 per share. What was your annual compound rate of return?

Answer 1

Answer:

5.84%    

Explanation:

We use the RATE function that is shown in the excel. Kindly find the attachment below:

The NPER shows the time period.  

Given that,  

Present value = $45

Future value or Face value = $47

PMT = $2

NPER = 3

The formula is shown below:

= Rate(NPER,PMT,-PV,FV,type)    

So, the annual compound rate of return is 5.84%