An investor buys 100 shares of a stock at $45 each. After one year, the stock appreciates by 20%, but the investor also receives a dividend of $2 per share. What is the investor's total return on investment after one year? - Malaeb
Investment Return Breakdown: How Much Did the Investor Really Earn?
Investment Return Breakdown: How Much Did the Investor Really Earn?
When investing in stocks, understanding both capital appreciation and dividends is crucial to calculating your true return on investment (ROI). This article walks through a practical example of a one-year investment strategy: buying shares, watching them appreciate, and collecting dividends.
Understanding the Context
The Investment Setup
An investor purchases 100 shares of a stock at $45 per share. At the end of the year:
- The stock price increases by 20%
- The investor receives a $2 dividend per share
Image Gallery
Key Insights
Step 1: Calculate the Purchase Cost
Total initial investment =
100 shares × $45 = $4,500
Step 2: Calculate the Sale Proceeds After Appreciation
A 20% increase on the original price of $45 raises the share price to:
$45 × 1.20 = $54
🔗 Related Articles You Might Like:
📰 meloncamp 📰 ken nunn attorney 📰 winter weather forecast for indiana 📰 Unlock Every Secret In Minecraft With These Hot New Games Mods 7969793 📰 Carry A Big Stick 8227192 📰 Acc Tournament 2025 Bracket 1328245 📰 You Wont Believe Which City Holds The 757S True Heart 6828501 📰 Game Support 5165682 📰 Uconn Tickets 9186292 📰 Grow A Garden Uncopylocked Roblox 7481878 📰 Master The Ultimate Shortcut Screenshot Key Command Youve Been Searching For 2538347 📰 Unlock The Ultimate Guide To The Hottest Anime Posters Todayshop Before Theyre Gone 2928433 📰 Squid Ink Pasta Is The Secret Recipe Stirring Food Trends Daily 7678249 📰 Roblox Quick Log In Code 8852106 📰 Is This Online Game Too Real Thought Provoking Creepy Games You Cant Ignore 5806685 📰 Add New Members 105 30 10530135135 4868997 📰 Die For This Look Zoe Saldanas Raw Nude Exposes Her Uncensored Side 1218732 📰 Birkenstock Boots Women 5393711Final Thoughts
Selling 100 shares at $54 each yields:
100 × $54 = $5,400
Step 3: Calculate Total Dividend Income
The investor receives a $2 per share dividend, so total dividend income is:
100 shares × $2 = $200
Step 4: Compute Total Return
Total return = Sale proceeds + Dividends – Initial investment
= $5,400 + $200 – $4,500
= $1,100
Step 5: Calculate Percentage Return on Investment (ROI)
Return on investment (ROI) percentage is:
(Total Return / Initial Investment) × 100
= ($1,100 / $4,500) × 100
≈ 24.44%
