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Personal Finance 1st Edition by Jack R. Kapoor
Edition 1ISBN: 1308231393Personal Finance 1st Edition by Jack R. Kapoor
Edition 1ISBN: 1308231393Calculating Return on Investment. Two years ago, you purchased 100 shares of Coca-Cola Company. Your purchase price was $33 a share, plus a total commission of $29 to purchase the stock. During the last two years, you have received the following dividend amounts: $0.94 per share for the first year and $1.12 per share the second year. Also, assume that at the end of two years, you sold your Coca-Cola stock for $40 a share minus a total commission of $34 to sell the stock.
a. Calculate the dividend yield for your Coca-Cola stock at the time you purchased it.
b. Calculate the dividend yield for your Coca-Cola stock at the time you sold it.
c. Calculate the total return for your Coca-Cola investment when you sold the stock at the end of two years.
d. Calculate the annualized holding period yield for your Coca-Cola investment at the end of the two-year period.
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a.
Calculation of Dividend Yield for CC Company:
Dividend yield is computed as annual dividend amount divided by the price per share.
Substitute $33 for Purchase Price per share and $0.94 for annual Dividend payment at the time of Purchase.
Hence, Dividend Yield was 0.0285 or 2.8 percent for stock of CC Company at the time of purchase.
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