Question

On July 3, 2009, Devin purchased 100 shares of CDEF stock at a cost of $30 per share. His commission was $29. He sold his shares on July 6, 2011, at a price of $45 per share less another $29 commission. During the time he held the stock, he earned dividends of $2.50 per share. What was his total return on his investment

Answer 1

Devin's total return on his investment in CDEF stock was $1692, which includes a capital gain of $1442 from the sale of the stock and $250 from dividends received.

Step-by-step explanation:

To calculate Devin's total return on his investment in CDEF stock, we need to consider both the capital gain from the sale of the stock and the dividends received during the period he held the stock.

Devin bought 100 shares at $30 each, so the initial investment was 100 x $30 = $3000. He paid a commission of $29 when buying, so total purchase cost is $3000 + $29 = $3029.

He sold the 100 shares at $45 each for a total of 100 x $45 = $4500. He paid another commission of $29 when selling, so the total amount received from the sale is $4500 - $29 = $4471.

The capital gain is therefore $4471 (sale proceeds) - $3029 (cost) = $1442.

Devin also earned dividends of $2.50 per share on his 100 shares, which totals to 100 x $2.50 = $250.

Adding the capital gain and the dividends gives us Devin's total return: $1442 (capital gain) + $250 (dividends) = $1692.

Answer 2

$1,692

Step-by-step explanation:

Data provided in the question:

Number of shares purchased = 100

Cost of stock = $30 per share

Commission = $29

Selling price per share = $45

Commission for selling = $29

Earned dividends = $2.50 per share

Now,

Total Return

= Number of Shares × (Sale Price - cost + Total dividends) - Total Commissions

or

Total Return = 100 × ($45 - $30 + $2.50) - (2 × $29)

or

Total Return = $1750 - $58

or

Total Return = $1,692