Question

You purchased 100 shares of McDonald's Corp. common stock on 04/01/2009 for $57.49 per share. On December 29, 2017 you sold the 100 shares for $172.12 per share. Dividend payment dates and amounts per share for the period of time you owned the stock are shown below.

PLEASE SHOW EXCEL FUNCTIONS/FORMULAS

(A) Calculate your annual rate of return on this investment.

(B) Calculate your annual rate of return without including the dividends in the calculation. You will need to use the XIRR function to calculate the answers for parts A & B.

$0.50	6/22/2009
$0.50	9/16/2009
$0.55	12/15/2009
$0.55	3/15/2010
$0.55	6/15/2010
$0.55	9/16/2010
$0.61	12/15/2010
$0.61	3/15/2011
$0.61	6/15/2011
$0.61	9/16/2011
$0.70	12/15/2011
$0.70	3/15/2012
$0.70	6/15/2012
$0.70	9/18/2012
$0.77	12/17/2012
$0.77	3/15/2013
$0.77	6/17/2013
$0.77	9/17/2013
$0.81	12/16/2013
$0.81	3/17/2014
$0.81	6/16/2014
$0.81	9/16/2014
$0.85	12/15/2014
$0.85	3/16/2015
$0.85	6/15/2015
$0.85	9/16/2015
$0.89	12/15/2015
$0.89	3/15/2016
$0.89	6/20/2016
$0.89	9/16/2016
$0.94	12/15/2016
$0.94	3/15/2017
$0.94	6/19/2017
$0.94	9/18/2017
$1.01	12/15/2017

Answer 1

A.

Total Dividends	$2,649.00	Formula = (100 shares x 26.49 total dividends)
Final investment value	17212	Formula = (100 shares x 172.12 final share price)
Beginning investment value	5749	Formula = (100 shares x 57.49 beginning share price)
return for 9 years	245.47%	Formula = (Ending price / beginning price) - 1
Annual return	14.77%	Formula = (1+R)^(1/t)
Time, t	9

B.

Date	Share Price
4/1/2009	57.49
29/12/2017	172.12	Excel Formula
return for 9 years	199.39%	Formula = (Ending price / beginning price) - 1
Annual return	12.96%	Formula = (1+R)^(1/t)
Time, t	9