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During the year IML Co paid a dividend of 15C per share. At the year end share price was $3.15. Share price at the start of the year was $2.50.
What is the shareholder return over the period.
John – I do not understand why in the answer – 15c has been added to the share price.
Thanks
Jitin
The share price has increased by 3.15 – 2.50 = 0.65
The dividend is 0.15.Therefore the total return is (0.65 + 0.15) / 2.50 = 32%
(I am away from home until tonight and so cannot check with the BPP revision kit until tonight. If the answer in the kit is different then do check that you have copied the question correctly 🙂 )
Thanks John.
But my understanding is the the share price in the end of the year already includes the effect of the dividends paid within the year. So we should take 15c off from 3.15 before calculating. …..!
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