After reading this chapter, it isn't surprising that you're becoming an investment wizard. With your newfound expertise, you purchase 100 shares of KSU Corporation for

$37.00

per share. Assume the price goes up to

$45.00

per share over the next 12 months and you receive a qualified dividend of

$0.50

per share. What would be your total return on your KSU 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 percent federal marginal tax bracket and 15 percent long-term capital gains and qualified dividends tax bracket and there is no state income tax on investment income.

Question content area bottom

Part 1

Your total rate of return on your KSU Corporation investment is

enter your response here%.

(Round to two decimal places.)

Part 2

Assuming you continue to hold the stock, your after-tax rate of return is

enter your response here%.

(Round to two decimal places.)

Part 3

Your realized after-tax rate of return if you sell the stock is

enter your response here%.

(Round to two decimal places.)