Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to d
ID: 2551280 • Letter: K
Question
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $15,000 for 890 shares of Malti Company’s common stock. She received a $668 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $18,000. Kathy would like to earn a return of at least 14% on all of her investments. She is not sure whether the Malti Company stock provided a 14% return and would like some help with the necessary computations. (Ignore income taxes.)
Explanation / Answer
The rate of Retuurnoninvestment = Dividend received for one year / Investment Made
=668/15000*100=4.45.
So yearly she is getting only 4.45% Return on her investment.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.