To determine: Percentage total return.
Introduction:
Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset. Percentage return refers to the returns stated as a percentage. It determines the returns per one dollar of investment or per $100 worth of investment.
Answer to Problem 10.1C
Explanation of Solution
Given information:
The initial price of stock is $119, dividend per share is $3.20 and ending share price is $150.
Formulae:
The formula to calculate the percentage total return:
The formula to calculate the dividend yield:
The formula to calculate the
Compute dividend yield:
Note: Dividend yield and capital gain yield is calculated to determine the Percentage of total return.
Hence, the dividend yield is 2.69%.
Compute capital gain yield:
Hence, the dividend yield is 26.05%.
Compute the percentage total return:
Hence, the percentage total return is 28.74%.
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Chapter 10 Solutions
F371 Essn. of Corporate Finance >C< By Ross MCG Custom ISBN 9781259320576
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