Question

You just purchased a share of SPCC for $100. You expect to receive a dividend of $5 in one year. If you expect the price after the dividend is paid to be $110, what total return will you have earned over the year

Answer 1

Answer:

15%

Explanation:

Data provided in the question

Ending share price = $110

Initial price = $100

Dividend received = $5

The computation of the total return is shown below:

= {(Ending share price - initial price) + Dividend} ÷ (Initial price) × 100

= {($110 - $100) + $5} ÷ ($100) × 100

= $15 ÷ $100 × 100

= 15%

Basically we use the above formula so that the total return could come