2 You purchased 800 shares of stock on December 31 2014 for

2) You purchased 800 shares of stock on December 31, 2014 for $32.45 per share. The stock pays an annual dividend of $3.25 per share. (Assume dividends are paid at the end of the year.) On December 31, 2015, the market price is $43.59 per share. What is your percentage return on the investment for the year?

Solution

% return on the investment = ( Ending price + dividend)/ Beginning price   -1

                                                       = (43.59 +3.25 )/ 32.45    -1

                                                        =1.4435 -1

                                                         = 44.35%