Question

Brandon purchases 95 shares of a stock for $45.49. In 5 years, he sells the stock for $4,533.52. He calculates his ROI (Return on Investment), shown below. Did he do this correctly? If not, what error did he make?

A) Yes, he solved it correctly.
B) No, he divided by the wrong number.
C) No, he should have a negative ROI.
D) No, he incorrectly calculated his initial investment.

Answer 1

The student did not calculate the ROI correctly by dividing by the wrong number.

Step-by-step explanation:

The student did not calculate the ROI (Return on Investment) correctly. To calculate ROI, you need to divide the profit by the initial investment and then multiply by 100 to express it as a percentage. In this case, the initial investment is the cost of 95 shares which is 95 * $45.49 = $4,321.55. The profit is the selling price minus the initial investment, which is $4,533.52 - $4,321.55 = $211.97. So, the ROI is (211.97/4321.55) * 100 = 4.9%.

Option B is the correct answer because the student divided by the wrong number.