Question

Wanda Sotheby purchased 160 shares of Home Depot stock at $71 a share. One year later, she sold the stock for $80 a share. She paid her broker a commision of $42 when she purchased the stock and a commision of $49 when she sold it. During the 12 months she owned the stock, she received $134 in dividends. Calculate Wanda’s total return on this investment.

Answer 1

$1,483

Step-by-step explanation:

Calculation for Wanda’s total return on this investment

First step is to calculate the Total cost of purchase using this formula

Total cost of purchase=(Price per share × Number of shares) + Commission

Let plug in the formula

Total cost of purchase=($71 × 160) + $42

Total cost of purchase=$11,360+$42

Total cost of purchase=$11,402

Second step is to calculate the Total sale proceeds using this formula

Total sale proceeds = (Price per share × Number of shares) - Commission

Let plug in the formula

Total sale proceeds =($80× 160) - $49

Total sale proceeds =$12,800-$49

Total sale proceeds =$12,751

Last step is to calculate the Total return using this formula

Total return= Dividends + Capital gain

Let plug in the formula

Total return= $134 + ($12,751 -$11,402 )

Total return=$134+$1,349

Total return=$1,483

Therefore Wanda’s total return on this investment will be $1,483