After reading this chapter, it isn’t surprising that you’re becoming an investment wizard. With your newfound expertise you purchase 100 shares of KSU Corporation for $40.66 per share. Over the next 12 months assume the price goes up to $ 47.47 per share, and you receive a qualified dividend of $0.66 per share. What would be your total return on your KSU Corporation investment? Assuming you continue to hold the stock, calculate your after-tax return. How is your realized after-tax return different if you sell the stock? In both cases assume you are in the 25 percent federal marginal tax bracket and 15 percent long-term capital gains and qualified dividends tax bracket and there is no state income tax on investment income.
Your total rate of return on your KSU Corporation investment is _______ %. (Round to two decimal places.)
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