Question

You purchased 300 shares of a particular stock at the beginning of the year at a price of $76.63. The stock paid a dividend of $1.60 per share, and the stock price at the end of the year was $83.14.

Required:
What was your dollar return on this investment?

Answer 1

The total dollar return on the stock investment is $2433, calculated by summing the dividends earned ($480) and the capital gains ($1953) from the 300 shares.

Step-by-step explanation:

The dollar return on an investment in stocks consists of two components: dividends and capital gains. To calculate your total dollar return, you must consider both the dividend income and the appreciation in the stock's price.

You purchased 300 shares at $76.63, and the stock paid a dividend of $1.60 per share. The stock price at the end of the year was $83.14. Therefore, your dividend income is 300 shares × $1.60, which equals $480. The capital gain per share is the difference between the end-of-year price and the purchase price, which is $83.14 - $76.63 = $6.51 per share. The total capital gain is 300 shares × $6.51, equating to $1953. Adding these together, your total dollar return is $480 (dividends) + $1953 (capital gains) = $2433.