On May 1, 2018, Karina purchased 100 shares of Gold stock at a total cost of $2,000. She received a total of $150 in dividends and sold the stock for $2,280 on May 15, 2019. Karina has a combined state and federal marginal tax rate of 28%. Her tax rate on both long-term capital gains and dividend income is 15%. What is her after-tax holding period return on her investment in Gold stock?
21.50% |
||
23.48% |
||
18.28% |
||
16.28% |
Purchase price of stock = $2,000
Sell price of Stock = $2,280
Dividend received = $150
Tax rate on capital gain and dividend income = 15%
Total profit during holding = (2280-2000) + 150
= $430
Total profit after tax = 430*(1-0.15)
= $365.5
Thus,
After tax Holding period Return = Total profit after tax/purchase price
= 365.5/2000
= 0.18275
= 18.28 %
Hope this will help, please do comment if you need any further explanation. Your feedback would be appreciated.
On May 1, 2018, Karina purchased 100 shares of Gold stock at a total cost of $2,000. She received a total of $150 in dividends and sold the stock for $2,280 on May 15, 2019. Karina has a combined stat...
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