Question

Jill purchased a share one year ago for $13.06. The share is now worth $15.26, and the total return to Jill for owning the share was 24.7 per cent. The dollar amount of dividends that she received for owning the share during the year is (expressed in dollars to the nearest cent; don't use $sign or commas eg 50 cents is 0.50)?

Answer 1

Solution :

The Total return on a given share is calculated using the following formula :

Total Return = [ ( Ending Price – Initial Price + Dividend Income ) / Initial Price ]

As per the Information given in the question we have

Total Return = 24.7 % = 0.247

Ending Price = $ 15.26 per share       ( Price of the share today )

Initial Price = $ 13.06 per share         ( Price of the share one year ago )

Dividend per share = To find

Let the Dividend per share be “ X “

Applying the above values in the formula we have

0.247 = ( 15.26 – 13.06 + X ) / 13.06

0.247 * 13.06 = 15.26 – 13.06 + X

3.225820 = 15.26 – 13.06 + X

3.225820 = 2.20 + X

3.225820 – 2.20 = X

X = 3.225820 – 2.20

X = 1.025820

X = 1.03 ( When rounded off to the nearest cent )

Thus the dollar amount of dividends that is received for owning the share during the year is = 1.03