Question

Suppose a stock had an initial price of $55 per share, paid a dividend of $1.75 per share during the year, and had an ending share price of $72. Compute the percentage total return.

rev: 09_20_2012

34.09

26.04

43.27

35.80

Answer 1

The Percentage of total return

Percentage of total return = [(Change in Share Price + Dividend per share) / Initial price per share] x 100

= [{(Ending share price – Initial Share Price) + Dividend per share} / Initial share price] x 100

= [{($72.00 per share - $55.00 per share) + $1.75 per share} / $55.00 per share] x 100

= [($17.00 per share + $1.75 per share) / $55.00 per share] x 100

= [$18.75 per share / $55.00 per share] x 100

= 34.09%

“Hence, the Percentage of total return will be 34.09%”