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Tkq co just paid a dividend of 21cenys per share and it’s share price one year ago was 3.10$per share .the total shareholder return for the year was 19.7%. what is the current share price?
Please do not simply type out a test question and demand an answer.
You must have an answer in the same book in which you found the question, so ask about whatever in the answer is not clear and I will explain.How we calculate total shareholder return is explained in Chapter 2 of our free lecture notes and in the free lectures that go with the chapter.
I didn’t understand y did they take 3.10$ x 1.197…
Why did they multiple by 1.197 ….As to find share price it’s dividend/shareholder return
I have watched the lecture video of Chapter 2 but that’s shows how to calculate the total shareholder return over the year…
But this question is just doing the same thing in reverse.
If the return is 19.7% then the total return is 19.7% x $3.10 = $0.6107
The dividend was $0.21, therefore the increase in the share price is 0.6107 – 0.21 = $0.4007Therefore the new share price is 3.10 + 0.4007 = $3.5007
You have not said where you found the question so I don’t know how they have shown the workings, but how you do the workings is irrelevant because this can only be asked in Section A of the exam. In Section A nobody looks at your workings.
Thank you ….now I understood it properly ….it was from Kaplan qn 138 section A
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