Question

In: Finance

A couple bought some stock for $30 per share that pays an annual dividend of $0.60...

A couple bought some stock for $30 per share that pays an annual dividend of $0.60 per share. After 2 years the price of the stock was $33.

(a) What is the return on investment?
%

(b) Find the simple interest rate on the growth of their investment.
%

Expert Solution

a)

Return on Investment (ROI) is nothing but a ratio of gain from an investment relative to its cost.

Formula for ROI is:

We can also write it as:

So let us put the values in the formula:

or

b)

We know the formula for the simple interest.

Where,

I = Simple Interest of the gain on investment.

P = Principal or the initial value of the investment.

R = Rate of Simple Interest or Rate of return

T = Time in years.

By substituting the values in the formula, we get,

Therefore, the simple interest rate on the growth of their investment is 7%

jeff jeffy answered 1 year ago

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