Calculate the stock total return for three years

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Reference no: EM132071953

Steve Berman purchased 1,000 shares at $40 per share at the beginning of the year. The company paid annual dividends of 5% (of the original price) on the shares and after two years the stock was worth $48. In year 3, the dividends were increased to 6% (of the original price) and at the end of year 3 the stock was worth $50. (15 marks)

• Calculate the stock’s total return for 3 years.

• Calculate the stock’s compound annual return (CAR) for the first 2 years.

Marking Grid: • Note: it is important that you show the steps in arriving at your answer-you will get credit for the correctly presented items.

• Correctly determining: Present Value, Dividend Income for 3 years, Capital Gain for 3 years, total $$ return for 3 years, and total % return for 3 years.

• Correctly identifying the keying steps: PV, FV, PMT, & N 1 pt.

• Getting the correct answer.

Reference no: EM132071953

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