Josh purchased 100 shares of XOM at the beginning of 2007. He received dividends per share of $1.37 (2007), $1.55 (2008), $1.66 (2009), $1.74 (2010), $1.85 (2011). At the end of 2011, just after receiving the last dividend, he sold the stock for $84.76. At what rate did the dividends from the end of 2007 to the end of 2011? Assume that all dividends were received at the end of the year.
A) 7.8%
B) 6.2%
C) 13.1%
D) 35%

Question

Quizplus · Accepted Answer

The total dividends received from the end of 2007 to the end of 2011 are $1.55 + $1.66 + $1.74 + $1.85 = $7.80. The total cost of the stock is $100 * $84.76 = $8,476. Therefore, the rate of return on the dividends is $7.80 / $8,476 * 100% = 7.8%.

Josh Purchased 100 Shares of XOM at the Beginning of 2007