One year ago, you purchased 500 shares of stock for $12 a share. The stock pays $0.22 a share in dividends each year. Today, you sold your shares for $28.08 a share. What is your total dollar return on this investment?

a. $8,150

b. $7,775

c. $8,260

d. $7,432

e. $6,222

a) Total dollar return on Investment = $8150

Explanation:

The return on equity is the sum of the dividends earned and capital gains made during the holding period of the investment.

Dividend is the proportion of the profit made by a company which is paid to shareholders.

Capital gains is another type of the return made on an equity investment as a result of increase in the value of the shares. It is difference between the cost of the share and the value at the time of disposal.

Therefore, we can can compute the return on the investment as follows:

Dividend = ($0.22 * 500) = $110

Capital gains = (28.08-12) * 500 = $8,040

Total dollar return on Investment = $110 + $8040 = $8150