Josh Purchased 100 Shares of XOM for $76

question 67

Multiple Choice

Josh purchased 100 shares of XOM for $76.63 per share at the beginning of 2007. He received dividends per share of $1.37 (2007) , $1.55 (2008) , $1.66 (2009) , $1.74 (2010) , $1.85 (2011) . At the end of 2011, just after receiving the last dividend, he sold the stock for $84.76. What was his average annual rate of return form both dividends and capital gains? (Hint: compute the IRR, assume that all dividends were received at the end of the year.)

• A) 9.831%
• B) 3.774%
• C) 3.423%
• D) 4.076%

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Definitions:

Straight-Line Amortization

A method of allocating the cost of an intangible asset evenly over its useful life.

Fiscal Year

A fiscal year is a 12-month period used for accounting purposes and preparing financial statements, differing from a calendar year.

Bonds Payable

A liability account in a company's balance sheet representing the amount it owes on issued bonds that have not yet been repaid.

Interest Expense

The cost incurred by an entity for borrowed funds, which is considered a non-operating expense on the income statement.