Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

for this guide, we are going to assume on 1 jan, 2015 you were given $30000 to invest in the stock market and you are

for this guide, we are going to assume on 1 jan, 2015 you were given $30000 to invest in the stock market and you are needed to evaluate your after-tax investment portfolio returns for 2015 and 2016.we are going to make some simplifying assumptions. the stock market consists of 4 stocks: disney(DIS), alphabet (GOOG), McDonald's (MCD) and Exon Mobil (XOM).All the trading in your portfolio took place on one of 5 dates-1/1/15, 7/1/2015,12/31/15,7/1/2016,12/31/16, and that of the stocks on those dates were:

1/1/15 1/15/15 7/1/15 12/31/15 7/1/16 12/31/16

DIS 72 80 86 91 120 96

GOOG 1180 1050 570 535 625 745

MCD 94 93 95 92 100 124

XOM 92 97 99 87 79 78

Dividends were all paid on 3/15 and 9/15 each year. the dividend rate for each stock were:

DIS 60/Share GOOG no dividend MCD 1.60/share XOM 1.40/share

the only stock split over the two years involved GOOG, which split 2:1 on 3/30/15

all stock trades incur a commission charge of $10

tax rates are 30% on dividends and realized capital gains.taxes are calculated and paid on 12/31 of each year and are rounded to the nearest dollar.

capital gains are accounted for on a first in-first out basis.all cash balances earn no interest.

during the 2 years ,you made the following trades

sold bought

1/1/15 bought 50 shares DIS

bought 5shares GOOG

Bought 50 shares MCD

Bought 70 shares XOM

1/15/15 bought 12 shares DIS

Bought 12 shares MCD

7/1/15 Sold 50 shares DIS bought 30 shares XOM

sold 50 shares MCD bought 10 shares GOOG

12/31/15 sold 10shares GOOG bought 75 shares MCD

7/1/16 Sold 100shares XOM bought 10 shares GOOG

12/31/16 Sold 10shares GOOG bought 100 shares DIS

use all the information to calculate the following for each of 2015 and 2016

a)total dividend income

b)total realized capital gains

c)tax paid

d)year end holding of each stock

e)year end cash balance

f)year end account value

g)annual after tax total return

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Recommended Textbook for

Project Financing Analyzing And Structuring Projects

Authors: Frank J Fabozzi, Carmel De Nahlik

1st Edition

9811232393, 9789811232398

More Books

Students also viewed these Finance questions

Question

Let n be a positive integer. Show that 2n +2

Answered: 1 week ago

Question

Verify the statement made in the remark following Example 10.2.

Answered: 1 week ago