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The Value of ONE Share of Microsoft
By JLP | December 11, 2006
Be sure and BOOKMARK this for future reference!
Had you been able to buy ONE share of Microsoft on March 13, 1986, the first day of trading according to Yahoo! Finance, it would be worth $9,781 at last Friday’s closing price of $29.40 (assuming that all splits and dividends were reinvested back into the stock).
Your ONE share would have grown to 332.690234 shares over the years due to seven 2-for-1 splits, two 3-for-2 splits, one special dividend of $3.00 per share, and quarterly dividends over the last couple years. You can find the dividend and split history here.
What’s even more amazing is this chart:
Notice that today’s value is only about half of what it was at it’s peak back in January of 2000. So, even taking into account the tech bubble, you STILL would have received an annualized return of 32.61%! Don’t believe me? Let’s do the math:
The beginning value is $28.
The ending value is $9,781
The time frame is 20.74743326 years [(12/11/2006 - 3/13/1986) ÷ 365.25 = 20.74743326]
The formula for Compound Annual Growth Rate (CAGR) is:
Inserting our numbers, the formula looks like this:
Pretty amazing, isn’t it?
Oh, and if you had purchased 100 shares ($2,800 worth) in 1986, it would be worth $978,109 today!
So you don’t misunderstand me, I’m NOT telling you to go out and stick all your money in one stock. As you can tell from the chart, Microsoft was quite volatile over the years and wouldn’t have been a good investment for the faint of heart. The purpose of this post was to show you just how rewarding one good stock can be. The hard part is finding that one good stock.
Topics: Financial Math Basics, Investing |