Question

assume that you purchased 100 shares of home depot stock for $40 a share, that you received an annual dividend of $0.60 a share, and that you sold your home depot stock for $50 a share at the end of one year. what is the total return for your investment? (ignore commission amounts for this question.)

Answer 1

The total return on the investment in Home Depot stock, which includes both the capital gains and dividends received, is $1,060.

Step-by-step explanation:

To calculate the total return of your investment in Home Depot stock, you would include both the dividend received and the capital gains from the sale of the stock. You bought 100 shares at $40 each and sold them at $50 each after one year. The capital gains per share are therefore $10 ($50 - $40). This gives you a total capital gain of $1,000 (100 shares * $10). Additionally, you received $0.60 in dividends per share, resulting in $60 in total dividends (100 shares * $0.60). Therefore, the total return on your investment is the sum of the capital gains and the dividends, which is $1,060 ($1,000 + $60).