Question

1) Jack earned a 14.6 per cent return on a share that he purchased one year ago. The share is now worth $14.42, and he just received a dividend of $0.78. How much did Jack originally pay for the share? (in dollars to the nearest cent; don't use $ sign)

2) Jill purchased a share one year ago for $13.39. The share is now worth $15.43, and the total return to Jill for owning the share was 20.6 per cent. The dollar amount of dividends that she received for owning the share during the year is (expressed in dollars to the nearest cent; don't use $sign or commas eg 50 cents is 0.50)

Answer 1

Solution:
Part 1:
Return on share earned by Jack = 14.6%
Current price of Share = $14.42
Dividend received = $0.78
To find the amount Jack paid originally for purchasing share,
Return on Share = [(Current price of share - Price of share at the beginning) + Dividend] / Price of share at the beginning
14.6 = [(14.42 - x) + 0.78] / x
x = 13.26
Price of share one year ago is $13.26.
Therefore, Jack originally paid $13.26 to purchase the share.
Part 2:
Purchase price of share = $13.39
Current price of share = $15.43
Total return earned by Jill = 20.6%
To find the amount of dividend received by Jill,
Return on Share = [(Current price of share - Price of share at the beginning) + Dividend] / Price of share at the beginning
20.6 = [(15.43 - 13.39) + x] / 13.39
x = $0.72 (approx)
Therefore, dividend received by Jill during the year is $0.72 (approx.).