Question
16 years ago, I purchased 158 shares of a stock worth $17.48 per share. There was a 2:1 split, a 4:1 split, and a 3:1
16 years ago, I purchased 158 shares of a stock worth $17.48 per share. There was a 2:1 split, a 4:1 split, and a 3:1 split during that time period. Today the stock is worth $2.22 per share. If the dividend yield was on average 14% during the last 16 years, what was the total rate of return? Round your answer to the nearest whole number.
Hint: To solve this problem, remember that the rate of return = i = (FV/PV)1/n - 1. FV is the number of shares at the final period times the price of a share at the final period, and PV is the initial number of shares times the initial price per share. Take note that there are splits, so your final number of shares isnt the same as the initial amount. You can either chose numbers to use and calculate PV (say 1 share for $1) or you can use variables. Use the information for PV to find what FV would be equal to. Also remember that the total rate of return is equal to the rate of return plus the dividend yield.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started