Question

If Jim invested $100,000 in an annual-dividend paying stock today with a 7 percent return, what investment time period will give Jim the greatest after-tax return?

If Jim Invested $100,000 in an annual-dividend paying stock today with a 7 percent return, what Investment time period will give Jim the greatest after-tax return? Multiple Choice o O year. o O 5 years O 10 years. o 20 years. o All yield the same after-tax return.

Answer 1

Investment amount = $100,000

Rate of return = 7%

Greatest after tax return does not depend upon the time period. Whether investment is made for 1 year, 5 years, 10 years or 20 years, it does not matter. All time periods will yield the same after tax return. Although absolute amount of return increases with the increase in the time period but percentage return remains the same.

Fifth option is correct.

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