Jack earned a 17.6 per cent return on a share that he purchased one year ago. The share is now worth $13.19, and he just received a dividend of $0.85. How much did Jack originally pay for the share? (in dollars to the nearest cent; don’t use $ sign)
Answer:
| Let the Purchse price of Share be "x". | |||||||||
| Return on Share = (Capital Gain + Dividend / Purchase Price) | |||||||||
| Return on Share = ((Selling Price - Purchase Price) + Dividend / Purchase Price) | |||||||||
| 17.60% = (($13.19 - x) + $0.85 / x) | |||||||||
| 0.176 = ($14.04 - x) / x | |||||||||
| 0.176 * x = $14.04 - x | |||||||||
| 0.176 * x + x = $14.04 | |||||||||
| 1.176 * x = $14.04 | |||||||||
| x = $14.04 / 1.176 | |||||||||
| x = $11.9 | |||||||||
| So, Purchase Price = 11.9 | |||||||||
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