You purchased a share of a company five years ago for $75 per share and the current price is $80 per share. Over the course of the five years you have received an average of $2 per share dividend. The nominal return on your investment is $ blank1 - Numeric Answer per share.
Answer (1)
To find the nominal return on your investment per share, we need to calculate the total gain from both the increase in share price and the dividends received, and then compare it to the original purchase price. Here’s how to do it step-by-step:
Initial Purchase Price : You bought the share for $75.
Current Price : The current price of the share is $80.
Price Gain : The increase in value per share is $80 - $75 = $5.
Dividends Received : Over the five years, you've received an average of $2 per share in dividends each year. So, total dividends over five years = $2 * 5 = $10.
Total Gain : This is the sum of the price gain and total dividends, which gives us $5 + $10 = $15.
Nominal Return : The nominal return per share is the total gain compared to the original purchase price, which is $15 per share.
Therefore, the nominal return on your investment is $15 per share.
