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uranmaximum [27]
4 years ago
7

You purchased GARP stock one year ago at a price of $67.67 per share. Today, you sold your stock and earned a total return of 18

.79 percent. The stock paid dividends of$2.92 per share over the year. What was the capital gains yield on your investment
Business
1 answer:
Svetlanka [38]4 years ago
7 0

Answer:

14.48%

Explanation:

The capital gains yield on the investment is increase in share price divided by the initial price paid to acquire the share a year ago.

The total return formula can be used to figure the price the stock was when sold as below:

total return =P1-Po+D/Po

P1 is the current price which is unknown

Po is the initial price of $67.67

total return is 18.79%

D is the dividend of $2.92

0.1879=P1-67.67+2.92/67.67

0.1879*67.67=P1-64.75

12.72=P1-64.75

P1=12.72+64.75

P1=77.47

Capital gains yield=(77.47 -67.67)/67.67=14.48%

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