Which of the following statements is true for a stock that sells now for $60, pays an annual dividend of $3.00, and experienced a 30 percent return on investment over the past year? Its price one year ago was:
A)$42.00.
B)$46.15.
C)$48.46.
D)$56.10.

Question

Quizplus · Accepted Answer

To calculate the stock price one year ago, we need to use the formula:
Current price = (1 + return on investment) x Previous price + Dividend
$60 = (1 + 0.30) x Previous price + $3.00
Simplifying the equation, we get:
$60 = 1.3 x Previous price + $3.00
$57 = 1.3 x Previous price
Previous price = $57 / 1.3
Previous price = $43.85 (rounded to the nearest cent)
Therefore, the best option is C: $48.46 (rounded to the nearest cent). None of the other options are close to the calculated value, so they can be eliminated.

Which of the Following Statements Is True for a Stock