Question

Assume Hanna purchased 100 shares of A&S Communications stock at an initial price of $35 per share. In addition, she paid $1 per share in transaction costs. Later, Hanna sold the investment for $39 per share. Once again, transaction costs were $1 per share. Because Hanna sold her investment at a price that is higher than the initial purchase price, Hanna has a capital gain after selling the investment. To calculate the amount of Hanna’s capital gain, subtract the total amount paid for the investment (including transaction costs) from the higher sale price (minus transaction costs). Complete this calculation as follows: Total Received from Selling the Investment Total Paid for the Investment Capital Gain ( $__?____ - $ ____?_____) ( $___?___+ $___?___ ) = $ __?

Answer 1

To calculate Hanna's capital gain, subtract the total amount paid for the investment from the higher sale price.

Step-by-step explanation:

To calculate Hanna's capital gain, we need to subtract the total amount paid for the investment (including transaction costs) from the higher sale price (minus transaction costs).

Initial purchase price for 100 shares: 100 * $35 = $3500

Transaction costs for the purchase: 100 * $1 = $100

Total paid for the investment: $3500 + $100 = $3600

Sale price for 100 shares: 100 * $39 = $3900

Transaction costs for the sale: 100 * $1 = $100

Total received from selling the investment: $3900 - $100 = $3800

Capital Gain: $3800 - $3600 = $200