Question

At the beginning of last year you invested $24,000 in 1,500 shares of Java Sweets Inc. During the year you received $3,750 as a dividend. At the end of the year you sold the shares for $15 each. Calculate your total dollar return, capital gain, percentage return, and dividend yield.

Answer 1

Opening investment = $24,000

Number of shares = 1,500

Opening share price = $24,000/1500 = $16

Closing share price = $15

Dividend per share = Dividend / Number of shares = $3,750 / $1,500 = $2.50

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Calculate the total return as follows:

Total return in dollars = ( Closing share price - Opening share price)*Number of shares + Dividend

= ($15 - $16)*1500 + $3,750

= $2,250

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Calculate the capital gain as follows:

Capital gain or loss = ( Closing share price - Opening share price)*Number of shares

= ($15 - $16)*1500

= -$1,500

Therefore, the capital loss is -$1,500.

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Calculate the total return s follows:

Total return = ( Closing share price - Opening share price + Dividend per share) / Opening share price

= ($15 - $16 + $2.50) / $16

= 9.38%

Therefore, the total return is 9.38%.

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Calculate the dividend yield as follows:

Dividend yield = Dividend per share / Opening price

= $2.50 / $16

= 15.63%

Therefore, the dividend yield is 15.63%.