Answer:
before-tax 29.87%
after-tax 26.37%
Explanation:
The return will be the capital gain and the dividend gain.
<u>capital gain:</u> ending market price - purchase price
$ 40.07 - $ 31.17 = $ 8.90
<u>dividend gain:</u> $0.41
<u><em>total return:</em></u> $8.90 + $0.41 = $9.31
<em>investment:</em> $ 31.17
rate of return before-tax: 9.31 / 31.17 = 0,29868 = 29.87%
<em><u>return after tax:</u></em>
dividends 0.41 x ( 1 - 0.25) = 0.3075
capital gain: (as we hold the share we can use long.term capital gain rate
9.31 x ( 1 - 0.15) = 7,9135
total return: 7.9135 + 0.3075 = 8.221
rate of return after-tax 8.221 / 31.17 = 0,2637471928136 = 26.37%
