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Chapter 1
Example 7
The share price of Woundale Co rose from $2.00 to $2.30 last year. During
the year, the company paid out a dividend of $0.12 per share.
What was the annual return to investors last year?
A 15%
B 21%
C 30%
D 42%
Solution
The answer is (B).
The annual return to investors is:
[(P 1 – P 0) + Dividend]/P 0
where P 0 is $2.00, P 1 is $2.30 and Dividend is $0.12.
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