Question

A couple bought some stock for $30 per share that pays an annual dividend of $0.60 per share. After 2 years the price of the stock was $33. (a) What is the return on investment?

Answer 1

Return on Investment is 12%.

Step-by-step explanation:

Net income = Dividend = $0.60

Current Value = $33

Original Value = #30

Formula for Return on Investment:

Return on Investment = (Net Income + (Current Value - Original Value)) / Original Value x 100

ROI = (($0.60 + ( $33 - $30 ) ) / $30 ) x 100

ROI = (($0.60 + $3 ) / $30 ) x 100

ROI = ( $3.60 / $30 ) x 100

ROI = 0.12 x 100

ROI = 12%

So Return on Investment is 12% for the given investment.