question archive Andrea purchased 250 shares of PAC stock for $37 per share and sold this same stock one year later for $44 per share
Andrea purchased 250 shares of PAC stock for $37 per share and sold this same stock one year later for $44 per share
Subject:AccountingPrice:2.86 Bought7
Andrea purchased 250 shares of PAC stock for $37 per share and sold this same stock one year later for $44 per share. He paid commissions of $15 when he purchased the stock and $10 when he sold the stock. Dividends of $1.50 per share were paid during the year. The total rate of return on this investment was
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The rate of return = 22.7%
Step-by-step explanation
The rate of return = (Sale price + Dividend - Commission paid on sale - Buy Price - Commission paid on buy) / (Buy Price + Commission paid on buy)
Rate of return =[(250*44)+( 1.5*250)-10-(37*250)-15]/{(37*250)+15}
= (11000 + 375 - 10 - 9250 - 15) / (9250 + 15)
Rate of return = 2100 / 9265=0.226659
=22.67% (Approx.)
Hence, rate of return = 22.7%
