Question

One year ago, you purchased 500 shares of stock for $12 a share. The stock pays $0.22 a share in dividends each year. Today, you sold your shares for $28.08 a share. What is your total dollar return on this investment

Answer 1

Gains on shares= $8,150

Step-by-step explanation:

Shares are equity that investors buy with the goal of getting returns from dividends paid. The returns are usually paid yearly.

In this scenario the shares where bought and sold after one year so the dividends paid is for one year.

Dividend= 500 shares* $0.22= $110

Initial value of shares= 500 shares* $12

Initial value of shares= $6,000

Present value of shares= 500 shares * $28.08

Present value of shares= $14,040

Gain on shares= Present value+ Dividend- Initial value

Gain on shares= 14,040+ 110- 6,000

Gains on shares= $8,150