You own shares in Yahoo that were purchased at a price of $21 per share.Microsoft has offered to purchase Yahoo and buy your shares at a price of $31 per share.What will be your return if you tender your shares to Microsoft and the deal is completed?
A)47.62%
B)33.45%
C)49.65%
D)43.34%
E)37.71%

Question

Quizplus · Accepted Answer

The return on the investment can be calculated as follows:

Return = ((Sale Price - Purchase Price) / Purchase Price) x 100
where Sale Price is the price Microsoft has offered to buy Yahoo at, which is $31 per share, and Purchase Price is the price at which the shares were purchased, which is $21 per share.

Return = (($31 - $21) / $21) x 100
Return = ($10 / $21) x 100
Return = 47.62%

Therefore, if the shares are tendered to Microsoft and the deal is completed, the return on the investment will be 47.62%. The best choice is A).

You Own Shares in Yahoo That Were Purchased at a Price