If a stock is purchased for $30 a share and pays $5 per share in dividends a year, what selling price at the end of the year would result in a return of 50%?
A) $60
B) $40
C) $35
D) $15

Question

Quizplus · Accepted Answer

To achieve a 50% return on a $30 investment, the total return needs to be $15 (50% of $30). Since the stock pays $5 in dividends, the remaining $10 needed to reach a 50% return must come from the sale price. Therefore, the selling price must be $30 (original price) + $10 (capital gain) + $5 (dividend) = $45. However, since the options provided do not include $45 and the closest correct approach to calculate the total return would be $30 * 1.5 = $45 (to achieve a 50% return), it seems there was a mistake in my explanation regarding the options provided. The correct calculation for a 50% return including dividends correctly is: the initial investment is $30, and to achieve a 50% return, the total amount after selling should be $30 * 150% = $45. Subtracting the $5 dividend from this target gives a selling price of $40 to achieve the total desired return.

If a Stock Is Purchased for $30 a Share and Pays