Your investment over one year had a realized return of 8.65% and a dividend of $2.65. If the
sale price was $42.58 per share, what was the cost of the investment, assuming you bought it
at the beginning of the period?

To calculate the cost of the investment, we use the formula for the **realized return**:

\[
\text{Realized Return} = \frac{\text{Sale Price} + \text{Dividends} - \text{Cost Price}}{\text{Cost Price}}
\]

Reorganize the formula to solve for the **Cost Price**:

\[
\text{Cost Price} = \frac{\text{Sale Price} + \text{Dividends}}{1 + \text{Realized Return}}
\]

### Given Data:
- Realized Return: $ 8.65\% = 0.0865 $
- Dividends: $ 2.65 $
- Sale Price: $ 42.58 $

### Substituting values into the formula:

\[
\text{Cost Price} = \frac{42.58 + 2.65}{1 + 0.0865}
\]

\[
\text{Cost Price} = \frac{45.23}{1.0865}
\]

\[
\text{Cost Price} \approx 41.63
\]

### Final Answer:
The cost of the investment was approximately **$41.63 per share**.

---

Do you want further clarification on this calculation or related concepts?  
Here are some related questions to explore:

1. What is the difference between realized return and nominal return?  
2. How does the inclusion of dividends affect the return calculation?  
3. How can this formula be adjusted for multi-year returns?  
4. What are the risks of relying solely on realized return for investment performance evaluation?  
5. How can transaction fees impact this type of return calculation?

**Tip:** Always separate dividends from capital gains when calculating returns—they provide distinct insights into investment performance.

Your investment over one year had a realized return of 8.65% and a dividend of $2.65. If the sale price was $42.58 per share, what was the cost of the investment, assuming you bought it at the beginning of the period?

Learn how to calculate the cost of an investment given a realized return of 8.65%, a dividend of $2.65, and a sale price of $42.58 per share. This problem explores key concepts in finance mathematics and return on investment (ROI) with step-by-step solutions. Suitable for high school students and beginner finance learners.

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