Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

D How will your group react to this revelation?

Answered: 1 week ago