Question

Five years ago, you invested $475 in corporate stock. You received dividends of $10 at the end of each quarter for two years. You then received quarterly dividends of $15 for the following three years. You just sold the stock for $1,700, immediately after receiving your 20th quarterly dividend check. What is your rate of return?
Group of answer choices

32.43%

31.03%

93.09%

9.73%

Answer 1

The rate of return earned on the investment of $475 five years ago in the corporate stock is 312.63%.

What is the rate of return?

The rate of return is the net gain or loss of an investment expressed as a percentage of the investment's initial cost.

It is given by the formula,  R= {Vf - Vi}/{Vi} x 100.

Where:

R = Rate of return

Vf = final value, including dividends and interest

Vi = initial value

Data and Calculations:

Investment cost = $475

Dividends received:

1st two years = $80 ($10 x 8)

Three years = $180 ($15 x 12)

Total dividends received = $260 ($80 + $180)

Total revenue from sale = $1,700

Total proceeds = $1,960 ($1,700 + $260)

Total return = $1,485 ($1,960 - $475)

Rate of return = 312.63%  ($1,485/$475 x 100)

Thus, the rate of return is 312.63%.

Learn more about calculating the rate of return at brainly.com/question/14220025

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