Question

An investor pays $63.00 per share for stock in a given REIT. The REIT declares a dividend of $4.00 per share and has an EPS of $2.37. Considering the recovery of capital (ROC), what is the new cost basis of the stock acquired by the investor

Answer 1

$61.37

Step-by-step explanation:

Calculation for the new cost basis of the stock acquired by the investor

Using this formula

New cost basis=Stock-Dividend+EPS

Let plug in the formula

New cost basis=$63.00-$4.00+$2.37

New cost basis=$61.37

Therefore the new cost basis of the stock acquired by the investor will be $61.37