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 $29.52 per share. Assume the price goes up to $36.77 per share over the next 12 months and you receive a qualified dividend of $0.69 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.) Assuming you continue to hold the stock, your after-tax rate of return is %. (Round to two decimal places) Your realized after-tax rate of return if you sell the stock is % (Round to two decimal places)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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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 $29.52 per share. Assume the price goes up to $36.77 per share
over the next 12 months and you receive a qualified dividend of $0.69 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.)
Assuming you continue to hold the stock, your after-tax rate of return is%. (Round to two decimal places)
Your realized after-tax rate of return if you sell the stock is%. (Round to two decimal places)
Transcribed Image Text: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 $29.52 per share. Assume the price goes up to $36.77 per share over the next 12 months and you receive a qualified dividend of $0.69 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.) Assuming you continue to hold the stock, your after-tax rate of return is%. (Round to two decimal places) Your realized after-tax rate of return if you sell the stock is%. (Round to two decimal places)
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