An investor earns dividends of $450 on a stock during the course of the year.At the end of the year, the stock is worth $10,142.Over the year, the total return on the stock was 12 percent.At the beginning of the year, the stock must have been approximately worth

Question

Quizplus · Accepted Answer

We can use the formula for total return:
Total return = (Ending value - Beginning value + Dividends) / Beginning value
0.12 = (10142 - Beginning value + 450) / Beginning value
Simplifying and solving for Beginning value:
Beginning value = $9,457

An Investor Earns Dividends of $450 on a Stock During