Morgan Simpson
03/30/2023 · Elementary School
Frances bought 144 shares of Dwyn Horticulture for \( \$ 7.73 \) apiece. Her broker charged her a commission of \( \$ 46.15 \) for the purchase. If the yearly dividend on Dwyn Horticulture is 61 cents per share, what is the annual yield on Frances's stock? a. 0.0758 b. 0.0789 c. 0.0132 d. 0.0320
UpStudy ThothAI Solution
Tutor-Verified Answer
Step-by-step Solution
To calculate the annual yield on Frances's stock, we first need to determine the total cost of her investment and the total annual dividend income.
1. **Calculate the total cost of the shares:**
\[
\text{Total cost of shares} = \text{Number of shares} \times \text{Price per share} + \text{Commission}
\]
\[
\text{Total cost of shares} = 144 \times 7.73 + 46.15
\]
\[
\text{Total cost of shares} = 1118.32 + 46.15 = 1164.47
\]
2. **Calculate the total annual dividend income:**
\[
\text{Total annual dividend} = \text{Number of shares} \times \text{Dividend per share}
\]
\[
\text{Total annual dividend} = 144 \times 0.61
\]
\[
\text{Total annual dividend} = 87.84
\]
3. **Calculate the annual yield:**
\[
\text{Annual yield} = \frac{\text{Total annual dividend}}{\text{Total cost of shares}}
\]
\[
\text{Annual yield} = \frac{87.84}{1164.47}
\]
\[
\text{Annual yield} \approx 0.0754
\]
Now, let's convert this to a percentage:
\[
\text{Annual yield} \approx 0.0754 \times 100 \approx 7.54\%
\]
Since this value does not match any of the options exactly, we can check the closest option. The closest option to 0.0754 is:
**a. 0.0758**
Thus, the answer is:
**a. 0.0758**
Quick Answer
The annual yield on Frances's stock is approximately 0.0758, which corresponds to option a.
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