Assume, at the beginning of the year, an investor bought 100 Pick n Pay shares for R12,25 each (net). At the end of the year, he sold the 100 shares for R14,25 net each. As a result of expansion of the Pick n Pay operations, he received a dividend of only R45 (in total) on his investment at the end of the year before selling his shares ex dividend.

Required:

a)Calculate the annual return on the investment. 

b)If the investor could have earned 12% per annum on a 12-month fixed deposit, was the investment worthwhile? Justify your answer. 

c) If the investor managed to net only R12,50 per share at the end of the year, what would the annual return have been? Given the opportunity mentioned in b), would the investment have been worthwhile? Justify your answer. 

Answer rating: 100% (QA)

The detailed answer for the above question is provided below aCalculate the annual return on the investment The annual return on the investment can be ... View the full answer