Question

Arnell johnson bought 310 shares of black petroleum company for $78 per share and paid a commission of $60. he sold the stock five years later for $160 per share and paid $185 commission. while he held the stock, it paid a dividend of $5.80 per share. what was arnell's total dollar return on this stock? (ignore time value of money)

a. $27,218
b. $26,973
c. $25,175
d. $25,420
e. $1798

Answer 1

Arnell Johnson's total dollar return on the stock investment is $27,218, which is calculated by adding the sale revenue and dividends received and then subtracting the initial purchase cost and commissions paid.

Step-by-step explanation:

Arnell Johnson's total dollar return on Black Petroleum Company stock can be calculated by considering the capital gains, dividends, and the commissions paid during purchase and sale.

First, we need to calculate the total purchase cost which includes the price of the shares and the commission paid when buying. Then, we calculate the total amount received from selling the shares minus the selling commission. Finally, we add the dividends earned during the holding period to these amounts to get the total dollar return.

1. Purchase cost: 310 shares × $78/share + $60 commission = $24,180 + $60 = $24,240.
2. Sale revenue: 310 shares × $160/share - $185 commission = $49,600 - $185 = $49,415.
3. Dividends: 310 shares × $5.80/share = $1,798.
4. Total dollar return: Sale revenue + Dividends - Purchase cost = $49,415 + $1,798 - $24,240 = $27,218.

Therefore, Arnell's total dollar return is $27,218.