Question

You bought 400 shares of XYZ over a year ago at $84.00 per share. During the...

You bought 400 shares of XYZ over a year ago at $84.00 per share. During the year, you received $3.25 in dividends per share. XYZ is now worth $88.00 per share. What is your pretax rate of return? If you’re in the 25 percent federal income tax bracket and your dividends and capital gains both qualify for taxation at the long-term capital gains tax rate (15%), what is your after-tax rate of return?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

PreTax rate of return = [P1 +D - P0]/P0

                  =[88 + 3.25 -84] /84

                  = 7.25 / 84

                  = 8.63%

After tax rate of return : Pretax rate [1-Tax rate]

                    = 8.63 [1-.15]

                    = 7.34 %

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A year​ ago, an investor bought 400 shares of a mutual fund at ​$8.51 per share....
A year​ ago, an investor bought 400 shares of a mutual fund at ​$8.51 per share. Over the past​ year, the fund has paid dividends of ​$0.83 per share and had a capital gains distribution of ​$0.69 per share. a. Find the​ investor's holding period​ return, given that this​ no-load fund now has a net asset value of ​$9.28. b. Find the holding period​ return, assuming all the dividends and capital gains distributions are reinvested into additional shares of the...
A year​ ago, an investor bought 600 shares of a mutual fund at ​$8.56 per share....
A year​ ago, an investor bought 600 shares of a mutual fund at ​$8.56 per share. Over the past​ year, the fund has paid dividends of ​$0.89 per share and had a capital gains distribution of ​$0.65 per share. a. Find the​ investor's holding period​ return, given that this​ no-load fund now has a net asset value of ​$9.11. ( answer in % and 2 decimal places) b. Find the holding period​ return, assuming all the dividends and capital gains...
1) A year ago you bought 100 shares of Bradley Corp. common stock for $32 per...
1) A year ago you bought 100 shares of Bradley Corp. common stock for $32 per share. During the year, you received dividends of $2.50 per share. The stock is currently selling for $33.50 per share. What was your total dividend income during the year? How much was your capital gain? Your total dollar return? 2) Suppose you expect the Bradley Corporation common stock in Problem 1 to be selling for $33 per share in one year, and during the...
You purchase 100 shares of USK Corporation for $41.71 per share. Assume the price goes up...
You purchase 100 shares of USK Corporation for $41.71 per share. Assume the price goes up to $50.34 per share over the next 12 months and you received a qualified dividend of $0.67 per share. What would be your total return on your USK Corporation investment? Assuming you continue to hold the stock, calculate your after-tax return. How is your realized after tax return different if you sell the stock? In both cases assume you are in the 25% Federal...
You bought a stock one year ago for ​$50.99 per share and sold it today for...
You bought a stock one year ago for ​$50.99 per share and sold it today for ​$58.38 per share. It paid a ​$1.66 per share dividend today. a. What was your realized​ return? b. How much of the return came from dividend yield and how much came from capital​ gain?
You bought a stock one year ago for ​$51.02 per share and sold it today for...
You bought a stock one year ago for ​$51.02 per share and sold it today for $57.51 per share. It paid a $1.49 per share dividend today. a. What was your realized​ return? b. How much of the return came from dividend yield and how much came from capital​ gain?
You bought a stock one year ago for ​$51.81 per share and sold it today for...
You bought a stock one year ago for ​$51.81 per share and sold it today for ​$44.41 per share. It paid a ​$1.66 per share dividend today. a. What was your realized​ return? b. How much of the return came from dividend yield and how much came from capital​ gain?
One year ago, Quita bought Purina Co. common stock for $25 per share. Today the stock...
One year ago, Quita bought Purina Co. common stock for $25 per share. Today the stock is selling for $33 per share. During the year Purina Co. made four dividend payments, each in the amount of $0.50 per share. Find the dividend yield, capital gains and total return associated with the stock for the year. The dividend yield, capital gains yield, and total return are:
On January? 1, 2013, an investor bought 300 shares of? Gottahavit, Inc., for ?$33 per share....
On January? 1, 2013, an investor bought 300 shares of? Gottahavit, Inc., for ?$33 per share. On January? 3, 2014, the investor sold the stock for ?$37 per share. The stock paid a quarterly dividend of ?$0.14 per share. How much? (in $) did the investor earn on this investment and assuming the investor is in the 33?% tax? bracket, how much will she pay in income taxes on this? transaction? Assume a preferential tax rate of? 15% on dividends...
You have XYZ stock in your Keogh pension plan account. You bought the stock for $8,500...
You have XYZ stock in your Keogh pension plan account. You bought the stock for $8,500 10 years ago when you were 50 years old. and the stock is now worth $14,500. You are in the 32 percent income tax bracket and pay 15 percent on long-term capital gains. a) What was the annual rate of growth in the value of the stock? b) Are you going to save or owe taxes if you decide to sell the stock? What...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT