Mr. Smith purchased 100 shares of ABC stock for $45 per share on January 1, 2007 and sold this same stock for $70 per share on December 31, 2010. Brokerage commissions are 4% of the total transaction value when buying and selling. Dividends of $3 per share were paid each year. Use this information to answer the following three questions.

1. The total dollar return on this stock transaction was

2. What is your total cumulative return (in percent) over the 4-year period?

3. What is your average annual percentage return over the four year period?

4. Assume you are in the 28% marginal tax bracket, dividends and long term capital gains will be subject to a 15% tax rate. What is your after tax average annual return?

5. If inflation averaged 3.2% per year over the four year period, the average annual after-tax real rate of return would be?