Francis purchased a share one year ago for $20, and it is now worth $24. The share paid a dividend of $3 during the year. What was the share's rate of return from capital appreciation during the year? (Round your answer to the nearest per cent.)
A) 17%
B) 20%
C) 29%
D) 35%

Question

Quizplus · Accepted Answer

To calculate the rate of return from capital appreciation, we need to subtract the initial price from the current price, and then divide by the initial price.

Capital appreciation = (Current price - Initial price) / Initial price
Capital appreciation = ($24 - $20) / $20
Capital appreciation = $4 / $20
Capital appreciation = 0.20 or 20%

Therefore, the rate of return from capital appreciation during the year was 20%.

Francis Purchased a Share One Year Ago for $20, and It