Question

Find the total dollar return on 160 shares bought at 27, received a dividend of $0.08 per share, and a capital gain of $0.14 per share during the last 12 months. Assume the market value now is $25 a share. Calculate the total return if sold now.

a) $1,216
b) $1,536
c) $896
d) $1,120

Answer 1

To calculate the total return, add the dividend return, capital gain, and sale proceeds. The total return if sold now is $4,035.20.

Step-by-step explanation:

To calculate the total return, we need to consider both the dividend and the capital gain. Let's break it down:

1. Dividend return: The dividend per share is $0.08. So, the total dividend return is 160 shares * $0.08 = $12.80.
2. Capital gain: The capital gain per share is $0.14. So, the total capital gain is 160 shares * $0.14 = $22.40.
3. Sale proceeds: The market value per share is $25. So, the total sale proceeds is 160 shares * $25 = $4,000.

The total return is the sum of the dividend return, capital gain, and sale proceeds: $12.80 + $22.40 + $4,000 = $4,035.20. Therefore, the total return if sold now is option a) $1,216.