# Simple Interest application problem

• Apr 23rd 2011, 02:17 PM
tfs985
Simple Interest application problem
I am having an issue finding the simple interest rate in this application problem:

A couple bought some stock for $30 per share that pays an annual dividend of$0.90 per share. After 1 year the price of the stock was $33. Find the simple interest rate on the growth of their investment. Using the Simple Interest formula (I=prt), I am getting: 3 = 30 (r) (1) I know I have to include the dividend in there somewhere, but I'm not sure whether to count the dividend as 0.90r or simply 0.9. Thanks for the help in advance, this forum is an incredible resource and those who take their time to help others should be commended for their efforts! • Apr 24th 2011, 12:58 AM CaptainBlack Quote: Originally Posted by tfs985 I am having an issue finding the simple interest rate in this application problem: A couple bought some stock for$30 per share that pays an annual dividend of $0.90 per share. After 1 year the price of the stock was$33. Find the simple interest rate on the growth of their investment.

Using the Simple Interest formula (I=prt), I am getting:

3 = 30 (r) (1)

I know I have to include the dividend in there somewhere, but I'm not sure whether to count the dividend as 0.90r or simply 0.9.

Thanks for the help in advance, this forum is an incredible resource and those who take their time to help others should be commended for their efforts!

The return in 1 year is \$3.90 so:

http://latex.codecogs.com/png.latex?...mes r \times 1

CB