Question

Suppose that 8 years ago, you purchased 284 shares of stock in a corporation. Between then and now, the stock had a 2:1 split and a 4:1 split. Today, each share sells for $11. If selling all of your shares today would give your investment an annual rate of return of 6%, what was the price per share when you made the purchase 8 years ago? Round your answer to the nearest dollar.

Answer 1

Orignial share purchased	284
Number of share after 2:1 split =284*2	568
Number of share after 4:1 split =568*4	2272
Number of share outstanding	2272
Value of share = 2272*11	24992
Annual return over 8 year period	6%
Intial cost = 24992/(1.06)^8	15680.29
Orignial share =	284
Price per share = 15680.29/284	55
Price per share 8 year ago = $55