On January 1, a shareholder purchased 81 shares of stock in Beta company for $115 per share. On August 20, the company paid an $8 dividend per share. On December 31, the shareholder sold all the shares for $113 per share. What is the overall Economic Rate of Return for this investment?

Question

Business

Alonso Elliott

4 November, 01:37

On January 1, a shareholder purchased 81 shares of stock in Beta company for $115 per share. On August 20, the company paid an $8 dividend per share. On December 31, the shareholder sold all the shares for $113 per share. What is the overall Economic Rate of Return for this investment?

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Answers (2)

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Brynn Hardin · Answer 1

Economic rate of return on the investment is as follows

Total Cash Received =

Dividend = 8

Share disposal = 113

Total 121

Total investment = 115

Net return on investment = 121-115 = 6

Net return on investment = 6/115*100 = 5.217%

Sofia Bonilla · Answer 2

5.22%

Explanation:

Dividend per share = $8

Loss on sales per share = Purchase price - Sales price - = $115 - $113 = - $2

Total return per share = Dividend per share - Loss on sales per share

= $8 - $2 = $6

Overall Economic Rate of Return = (Total return per share : purchase price) * 100

Overall Economic Rate of Return = ($6 : $115) * 100

= 5.217391304347830

= 5.22% approximately

Therefore, the overall Economic Rate of Return for this investment is 5.22%.