Calculate the cash income component of your investment


Suppose that you bought 100 shares of ABC Inc., for $25 per share exactly one year ago. You have just received $1.50 in dividends, and the current share price is $30 per share.

a. Calculate the cash income component of your investment return on ABC shares.

b. Calculate the capital gain/loss component of your investment return on ABC shares.

c. Calculate the dividend yield on ABC shares.

d. Calculate the capital gains yield on ABC shares.

e. Calculate the total percentage return on ABC shares.

f.   If you keep your ABC shares, should you still consider the capital gain/loss as part of your investment return, or as simply a “paper” gain? Explain?

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Financial Management: Calculate the cash income component of your investment
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