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Homework answers / question archive / Jack earned a 15

Jack earned a 15

Finance

Jack earned a 15.5 per cent return on a share that he purchased one year ago. The share is now worth $14.24, and he just received a dividend of $1.76. How much did Jack originally pay for the share? (in dollars to the nearest cent; don't use $ sign) Answer:

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Correct answer = $13.85

Let the original price per share be X

Total return per share = Capital gain + Dividend

Total return per share = $14.24 - X + $1.76 = $16 - X

Return % = Total return per share / Original price per share

15.5% = ($16 - X) / X

Thus, solving for X, we get X = $13.85

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