M & B 4th Edition by Dean Croushore

Exercise 15

Suppose that an investor purchased 100 shares of IBM stock at a price of $100 on December 31, 2010. During the year 2011, IBM paid dividends of $2.00 per share, and at the end of the year, the investor sold the stock at a price of $115.
a If there were no taxes or infl ation, what was the total return?
b If there were no taxes but infl ation was 5 percent, what was the real return?
c If the tax rate was 15 percent on dividends and capital gains, what was the after-tax real return?