You purchased WPC common shares for $50 on year ago. You have received total dividends equal to $8 during the year. If your total return during the period is 12%, then what was the price of WPC when you sold the stock today?
To determine the price of WPC when you sold the stock today, we can use the formula for total return:
Total Return = (Ending Value - Beginning Value + Dividends) / Beginning Value
Let's calculate the beginning value:
Beginning Value = Purchase Price + Dividends Received
= $50 + $8
= $58
Now we can rearrange the total return formula to solve for the ending value:
Ending Value = (Total Return * Beginning Value - Dividends) + Beginning Value
Plugging in the values given:
Ending Value = (0.12 * $58 - $8) + $58
= ($6.96 - $8) + $58
= -$1.04 + $58
= $56.96
Therefore, the price of WPC when you sold the stock today was $56.96.
To find the price of WPC when you sold the stock today, we need to calculate the capital gain. We know that the total return during the period is 12%, which includes both the capital gain and dividends.
Let's calculate the capital gain first:
Capital gain = Total return - Dividends
Capital gain = 12% - $8 = 0.12 - $8 = -$7.88
Since the capital gain is negative, it means the value of your investment has decreased. Therefore, we need to subtract the capital gain from the initial purchase price to find the selling price:
Selling price = Purchase price - Capital gain
Selling price = $50 - (-$7.88) = $50 + $7.88 = $57.88
So, the price of WPC when you sold the stock today was $57.88.