Question

Suppose a stock had an initial price of $113 per share, paid a dividend of $2.90 per share during the year, and had an ending share price of $141. Requirement 1: Compute the percentage total return. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Percentage total return % Requirement 2: What was the dividend yield

Answer 1

(a) 27.35%

(b) 2.57%

Step-by-step explanation:

Given that,

Ending price = $141

Initial price = $113

Dividend = $2.90

(a) Percentage total return %:

= [(Ending price - Initial price) + Dividend] ÷ Initial price

= [($141 - $113) + $2.90] ÷ $113

= 0.2735 or 27.35%

Therefore, the percentage total return 27.35%.

(b) Dividend yield:

= Dividend ÷ Price

= $2.90 ÷ $113

= 0.0257 or 2.57%