Rate of Return on shares

cj19

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Sep 4, 2010
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Hi,
I have a question which asks me to calculate the percentage return made in each full calendar year, up to and including 1995. I purchased shares on 31 December 1990 and the answers should take into account both the capital gains and the dividends earned during this period.
On 31 December 1990 I purchased some shares for $10, If i have to calculate the percentage rate of return for the each of the next 5 years, would the formula be the (dividend + (sale - purchase price)) / purchase price? For the purchase price for all years would it be the price I paid for them initially (ie. The purchase price becomes a base price) or their previous year market value?
For example 1991: I received $13 in dividends and the market value of the shares was $20 hence
(13 + (20-10))/10
In 1992 I received $17 in dividends and the market value of the shares fell to $15
1992: (17 + (15 -10))/10 or would it be (17 + (15-20))/ 20
Would it be $10 as that was the price I paid on dec 31 1990 or would it be $20 as that was the previous year’s market value.
I am not selling or buying any extra shares during this period.
Thanks very much
Cj
 
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