Questions: Homework Chapter 13 Part 2 of 5 Points: 0 of 1 For the following stock investment, find (a) the total purchase price, (b) the total dividend amount, (c) the capital gain or loss, (d) the total return, and (e) the percentage return. Ignore broker and SEC fees. Number of shares Purchase price per share Dividend per share Sale price per share 70 50 2 111 (a) What is the total purchase price? 3500 (b) What is the total dividend amount?

Solution Steps

To calculate the total purchase price (TP), multiply the number of shares (\(n=70\)) by the purchase price per share (\(P_{purchase}=50\)). \[TP = n \times P_{purchase} = 70 \times 50 = 3500\]

To calculate the total dividend amount (TD), multiply the number of shares (\(n=70\)) by the dividend per share (\(D=2\)). \[TD = n \times D = 70 \times 2 = 140\]

To calculate the capital gain or loss (CGL), calculate the difference between the sale price per share (\(P_{sale}=111\)) and the purchase price per share (\(P_{purchase}=50\)), then multiply by the number of shares (\(n=70\)). \[CGL = n \times (P_{sale} - P_{purchase}) = 70 \times (111 - 50) = 4270\]

To calculate the total return on investment (TR), sum the total dividend amount (TD) and the capital gain or loss (CGL). \[TR = TD + CGL = 140 + 4270 = 4410\]

To calculate the percentage return on investment (%R), calculate the total return on investment (TR) divided by the total purchase price (TP), then multiply by 100. \[%R = \left(\frac{TR}{TP}\right) \times 100 = \left(\frac{4410}{3500}\right) \times 100 = 126\%\]

Final Answer: