a. Tear plc has not paid a for 20 years. The current share price is 580p and the current share market index level is 3,100. Calculate total shareholder returns for the past three years, the past five years and the past ten years, given the following data:
b. Comment on the problems of total shareholders’ returns as a metric for judging managerial performance.
c. Calculate the wealth added index for ten and five years for Tear plc given the following assumptions:
€¢ The required rate of return on shares of the same risk class as Tear plc, over both ten and five years, was 9 per cent per year.
€¢ The company had 10 million shares in issue throughout the entire period.