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The Value of ONE Share of Microsoft

By JLP | December 11, 2006

Digg it?

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:

The Value of One Share of Microsoft

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) &#247 365.25 = 20.74743326]

The formula for Compound Annual Growth Rate (CAGR) is:

CAGR = (Ending Value &#247 Beginning Value)1 &#247 Number of Years – 1

Inserting our numbers, the formula looks like this:

CAGR = ($9,781 &#247 $28)1 &#247 2074743326 – 1

CAGR = 349.32142860.048198733 – 1

CAGR = 1.326112089 – 1

CAGR = .326112089 or 32.61%

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 | 5 Comments »


5 Responses to “The Value of ONE Share of Microsoft”

  1. Matt Says:
    December 11th, 2006 at 3:02 pm

    If it’s an industry that you know well you can make a great deal of money over the long term. Companies grow all the time and although not all are great winners like Microsoft there are a lot of strong stable companies that can net you good returns over time.

  2. Bryan C. Fleming » Your $39,000 Investing Pile Says:
    December 11th, 2006 at 4:54 pm

    [...] JLP demonstrates this over at All Financial Matters.  He sites what one share of Microsoft is worth today if you had purchased it in 1986.  Let’s look at his example: [...]

  3. Debt Free Says:
    December 12th, 2006 at 10:20 pm

    Alot of people in the Puget Sound area made out pretty well, not only because of MSFT stock options directly, but because of the boom they fueled. Heady times they were, with 28yr olds driving brand new, paid for 911s, and living in top of the line, 4,500 sq ft homes. It was fun to be around the Sound in the ’90s. If you were in any way related to the residential construction industry, but especially in the custom audio / video, landscaping, or high-end appliance or finish carpentry busness, chances are you did very well.

  4. WallerBlog.com - Simple Financial Advice » My Favorite Articles for the Week of December 11th Says:
    December 15th, 2006 at 11:45 am

    [...] If you purchased one share of Microsoft’s stock when it debuted on March 13, 1986 what would be worth today? The Value of One Share of Microsoft. [...]

  5. sharon Says:
    December 4th, 2007 at 11:12 pm

    What would the value be today had I purchased 100 shares on opening day and how many shares would I have today with these 100 shares? Also didn’t shares start out that day selling at 21.00 and end at 28.00 dollars?

Comments