Question

Kendrick Bishop bought 200 shares of bayview petroleum company for $100 per share and paid a commission of $50. He sold the stock five years later for $125 per share and paid $65 commission. while he held the stock, it paid exactly one dividend of $4.00 per share. What was Kendrick's total dollar return on this stock?

O $24,900
O $20,000
O $5,800
O $5,700
O $5,685

Answer 1

Kendrick's total dollar return on Bayview Petroleum Company's stock is $5,685, which includes capital gains, received dividends, and subtracted commissions.

Step-by-step explanation:

To calculate Kendrick's total dollar return on the stock he held with Bayview Petroleum Company, we need to add the capital gains, dividends received, and then subtract the cost of both commissions.

First, we calculate the capital gain:

• He sold 200 shares at $125 per share: 200 shares * $125/share = $25,000.
• He bought those shares at $100 per share: 200 shares * $100/share = $20,000.
• Capital gain = $25,000 - $20,000 = $5,000.

Next, we add the dividends received:

• Dividend per share = $4.00.
• Total dividend = 200 shares * $4/share = $800.

Finally, we subtract the commissions paid:

• Buying commission = $50.
• Selling commission = $65.
• Total commission = $50 + $65 = $115.

Total return = Capital gain + dividends received - commissions paid

Total return = $5,000 + $800 - $115

Total return = $5,685.