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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 80pershare,paidadividendof80 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.)

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Solution

To calculate the percentage total return, you need to follow these steps:

  1. First, calculate the capital gain. This is the difference between the ending share price and the initial price. In this case, it would be 8989 - 80 = $9.

  2. Next, calculate the total return in dollars. This is the sum of the capital gain and the dividend. In this case, it would be 9(capitalgain)+9 (capital gain) + 1.50 (dividend) = $10.50.

  3. 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 (10.50/10.50 / 80) * 100 = 13.125%.

So, the percentage total return is 13.13% (rounded to two decimal places).

This problem has been solved

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