One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 per share. The company pays an annual dividend of $0.46 per share. Today, you sold the shares for $37.92 each. What is your total percentage return on this investment?
Business · High School · Thu Feb 04 2021
Answered on
To calculate the total percentage return on the investment, we need to take into account both the capital gain (or loss) from the sale of the shares and the income from the dividends. Here's how you can determine the total return:
1. Capital Gain or Loss: First, we calculate the capital gain or loss by subtracting the purchase price from the selling price and then multiplying by the number of shares.
Selling Price per Share = $37.92 Purchase Price per Share = $38.19 Number of Shares = 100
Capital Loss per Share = Selling Price per Share - Purchase Price per Share Capital Loss per Share = $37.92 - $38.19 Capital Loss per Share = -$0.27 (which indicates a loss because it's negative)
Total Capital Loss = Capital Loss per Share * Number of Shares Total Capital Loss = -$0.27 * 100 Total Capital Loss = -$27.00
2. Dividend Income: Next, we calculate the total income from the dividends by multiplying the dividend per share by the number of shares.
Annual Dividend per Share = $0.46 Dividend Income = Annual Dividend per Share * Number of Shares Dividend Income = $0.46 * 100 Dividend Income = $46.00
3. Total Return: Now, we sum the capital loss and the dividend income to find the total return.
Total Return = Total Capital Loss + Dividend Income Total Return = -$27.00 + $46.00 Total Return = $19.00
4. Total Percentage Return: Finally, we find the total percentage return by dividing the total return by the initial investment amount, and then multiplying by 100 to get the percentage.
Initial Investment = Purchase Price per Share * Number of Shares Initial Investment = $38.19 * 100 Initial Investment = $3819.00
Total Percentage Return = (Total Return / Initial Investment) * 100 Total Percentage Return = ($19.00 / $3819.00) * 100 Total Percentage Return = 0.4975%
So the total percentage return on the investment is approximately 0.4975%.