You purchased Butterfly Wing Corporation stock exactly one year ago at a price of $75.34 per share. Over the past year, the stock paid dividends of $2.44 per share. Today, you sold your stock and earned a total return of 14.96 percent. What was the price at which you sold the stock?

Multiple Choice

$88.78

$86.61

$92.38

$84.17

$90.94

To calculate the selling price of the stock, let's use the total return formula:

\[
\text{Total Return} = \frac{(\text{Selling Price} - \text{Purchase Price} + \text{Dividends})}{\text{Purchase Price}}
\]

Given values:
- Total Return = 14.96% = 0.1496
- Purchase Price = $75.34
- Dividends = $2.44

Rearrange to find the Selling Price:

\[
0.1496 = \frac{(\text{Selling Price} - 75.34 + 2.44)}{75.34}
\]

\[
0.1496 \times 75.34 = \text{Selling Price} - 75.34 + 2.44
\]

Calculating this step-by-step:

1. $ 0.1496 \times 75.34 = 11.276864 $
2. $ 11.276864 + 75.34 - 2.44 = \text{Selling Price} $
3. $ \text{Selling Price} = 84.17 $

So, the correct answer is:

**$84.17**

Would you like further details on the calculations, or do you have any questions?

---

1. What is the formula to calculate total return on a stock investment?
2. How does the dividend payment affect the total return calculation?
3. Why is it necessary to consider the initial purchase price in return calculations?
4. How would the answer change if the dividend were higher?
5. What other factors could affect the stock's selling price?

**Tip:** Always ensure to adjust for dividends when calculating total return on stock investments.

You purchased Butterfly Wing Corporation stock exactly one year ago at a price of $75.34 per share. Over the past year, the stock paid dividends of $2.44 per share. Today, you sold your stock and earned a total return of 14.96 percent. What was the price at which you sold the stock?

Learn how to calculate the selling price of a stock investment. Given a purchase price of $75.34 per share, dividends of $2.44 per share, and a total return of 14.96%, this problem demonstrates key financial concepts like return on investment and dividend adjustment. Suitable for college-level finance students.

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