Question

one year ago, theresa purchased 600 shares of outland co. stock for $3,600. the stock does not pay any regular dividends but it did pay a special dividend of $0.25 a share last week. this morning, she sold her shares for $7.25 a share. what was the total return on this investment?

Answer 1

The total return on Theresa's investment in Outland Co. stock is $4,500, which includes the return from selling the shares and the dividend received.

Step-by-step explanation:

To calculate the total return on investment, we need to consider the initial investment, any dividends received, and the final selling price of the shares.

Given that Theresa purchased 600 shares of Outland Co. stock for $3,600, the initial investment can be calculated by dividing the total cost by the number of shares: $3,600 / 600 = $6 per share.

The special dividend received of $0.25 per share needs to be multiplied by the number of shares: $0.25 x 600 = $150. This is the additional return from the dividend.

The final selling price of $7.25 per share also needs to be multiplied by the number of shares: $7.25 x 600 = $4,350. This is the return from selling the shares.

To calculate the total return, we add the additional return from the dividend to the return from selling the shares: $150 + $4,350 = $4,500.

The total return on this investment is $4,500.