Gce Model Questions Vol1 2017 Commerce Question 40
Practice objective / multiple choice question 40 from the 2017 Gce Model Questions Vol1 Commerce examination.
An investor purchases 500 shares of Company X at £12 per share. A transaction cost of \(0.5\%\) of the purchase price is incurred. The shares pay an annual dividend of £0.80 per share, expected to grow at \(4\%\) per year indefinitely. The investor plans to hold the shares for 5 years and then sell them. The expected market price after 5 years is forecast to be £15 per share. Calculate the internal rate of return (IRR) for the 5‑year holding period, taking into account the dividend payments, dividend growth, the sale price and the initial transaction cost. Express the IRR as a percentage to two decimal places.
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About This Question
This is Gce Model Questions Vol1 2017 Commerce Question 40. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Hard .
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