Question

Thomas purchased 2,500 shares of EKK stock for $135,000 one year ago. The stock pays annual dividends of S.30 a share. Today, Thomas sold all of his shares for $49 a share. What is Thomas' total return on this investment?
A. 10.87 percent
B. 10.20 percent
C. 9.59 percent
D. 9.26 percent
E. 8.70 percent

Answer 1

Answer:

His return on investment is negative 8.7%

Explanation:

Thomas purchased 2,500 shares of EKK at $54 per share (=$135,000 / 2,500).

He received $750 (= $0.30 x 2,500) in annual dividends.

He sold his 2,500 shares at $49 per share = $122,500

The total amount of money he received from his investment is $122,500 + $7

50 = $123,250, then we divide that by $135,000 = 0.913 - 1 = -8.7%