Suppose a stock had an initial price of $80 per share, paid a dividend of $1.50 per share during the year, and had an ending share price of $89. Compute the percentage total return. (Round the final answer to 2 decimal places.)
Question
Suppose a stock had an initial price of 1.50 per share during the year, and had an ending share price of $89. Compute the percentage total return. (Round the final answer to 2 decimal places.)
Solution
To calculate the percentage total return, you need to follow these steps:
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First, calculate the capital gain. This is the difference between the ending share price and the initial price. In this case, it would be 80 = $9.
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Next, calculate the total return in dollars. This is the sum of the capital gain and the dividend. In this case, it would be 1.50 (dividend) = $10.50.
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Finally, calculate the percentage total return. This is the total return in dollars divided by the initial price, then multiplied by 100 to get a percentage. In this case, it would be (80) * 100 = 13.125%.
So, the percentage total return is 13.13% (rounded to two decimal places).
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