On January 1, a shareholder purchased 81 shares of stock in Beta company for $115 per share. On August 20, the company paid an $8 dividend per share. On December 31, the shareholder sold all the shares for $113 per share. What is the overall Economic Rate of Return for this investment?

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haseebkhuhro256 haseebkhuhro256 · Answer 1 · 2020-03-09T08:47:38+01:00

Answer:

Explanation:

Economic rate of return on the investment is as follows

Total Cash Received =

Dividend = 8

Share disposal = 113

Total 121

Total investment = 115

Net return on investment = 121-115 = 6

Net return on investment = 6/115*100 =5.217%

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amcool amcool · Answer 2 · 2020-03-09T08:57:02+01:00

Answer:

5.22%

Explanation:

Dividend per share = $8

Loss on sales per share = Purchase price - Sales price - = $115 - $113 = -$2

Total return per share = Dividend per share - Loss on sales per share

= $8 -$2 = $6

Overall Economic Rate of Return = (Total return per share ÷ purchase price) × 100

Overall Economic Rate of Return = ($6 ÷ $115) × 100

= 5.217391304347830

= 5.22% approximately

Therefore, the overall Economic Rate of Return for this investment is 5.22%.