For this query, the time presented seems unclear to me. I understand that the rate of return is determined by total return over the investment. Assuming Matt received $400 as dividends without reinvesting them into additional shares, his total return across two years amounted to $500. Conversely, if the dividends were reinvested into the stock—something that typically happens with a 401(k) or IRA—his ROI would render a mere 6% due to only a $100 gain on a $1500 investment. In an actual market scenario, it’s likely that Matt would have experienced about a 5% return on a solid stock, while Bella would have had approximately 0.05% from a savings account.
I hope this was helpful!;)
FV = P(1 + r/t)^nt, where P denotes the principal amount, r is the interest rate, t is the frequency of compounding per year, and n is the total number of years.
Calculating: FV = 7650(1 + 0.05/4)^(9 x 4) = 7650(1 + 0.0125)^36 = 7650(1.0125)^36 = 7650(1.564) = $11,964.17