Answer: The rate of return on an investment is calculated using the formula:
Rate of Return (%)
=
(
Net Profit
Total Cost
)
×
100
Rate of Return (%)=(
Total Cost
Net Profit
)×100
To find the net profit, first calculate the total cost, which includes the cost of the stocks and the commission on the sale.
The cost of buying 15 shares of Stock A at $15 per share:
Total Cost of Purchase
=
Number of Shares
×
Cost per Share
Total Cost of Purchase=Number of Shares×Cost per Share
Total Cost of Purchase
=
15
×
15
=
225
dollars
Total Cost of Purchase=15×15=225 dollars
The total cost of selling 15 shares of Stock A for $330, considering the $6 commission:
Total Earnings from Sale
=
Selling Price
−
Commission
Total Earnings from Sale=Selling Price−Commission
Total Earnings from Sale
=
330
−
6
=
324
dollars
Total Earnings from Sale=330−6=324 dollars
Now, calculate the net profit:
Net Profit
=
Total Earnings from Sale
−
Total Cost of Purchase
Net Profit=Total Earnings from Sale−Total Cost of Purchase
Net Profit
=
324
−
225
=
99
dollars
Net Profit=324−225=99 dollars
Now, plug the values into the rate of return formula:
Rate of Return (%)
=
(
99
225
)
×
100
Rate of Return (%)=(
225
99
)×100
Rate of Return (%)
=
44
%
Rate of Return (%)=44%
Therefore, the rate of return on the investment, rounded to the nearest tenth, is 44.0%.