Question

Compute the total and annual returns on the described investment. Five years after buying 100 shares of XYZ stock for $70 per share, you sell the stock for $9800. The total return is (Do not round until the final answer. Then round to one decimal place as needed)

Answer 1

The total return on the investment is $2800, and the annual return is $560.

Step-by-step explanation:

To calculate the total return on the investment, we need to find the difference between the selling price and the original cost of the stock. In this case, the original cost of 100 shares of XYZ stock is $70 per share, so the total cost is $70 x 100 = $7000. The selling price is $9800, so the total return is $9800 - $7000 = $2800.

The annual return can be calculated by dividing the total return by the number of years the investment was held. In this case, the investment was held for 5 years, so the annual return is $2800 ÷ 5 = $560.