You purchased a stock at the end of the prior year at a price of $88. At the end

Question

You purchased a stock at the end of the prior year at a price of $88. At the end of this year the stock pays a dividend of $2.50 and you sell the stock for $94. What is your return for the year? Now suppose that dividends are taxed at 15 percent and long-term capital gains (over 11 months) are taxed at 30 percent. What is your aftertax return for the year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

You purchased a stock at the end of the prior year at a price of $88. At the end of this year the stock pays a dividend of $2.50 and you sell the stock for $94. What is your return for the year? Now suppose that dividends are taxed at 15 percent and long-term capital gains (over 11 months) are taxed at 30 percent. What is your aftertax return for the year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

dividend= $2.5

capital gian= $94- $88= $6

total return= (2.5 + 6)/88= 8.5/88= 0.0965 or 9.659

after tax return=

(2.5 - 10%) + (6 - 30%)= 2.25+ 4.2= 6.45

6.45/88= 7.329%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.