Question

Sarah and James Hernandez purchased 150 shares of Macy's stock at $32 a share. One year later, they sold the stock for $40.00 a share. They paid a broker a commission of $9 when they purchased the stock and a commission of $13 when they sold the stock. During the 12-month period the couple owned the stock, Macy's paid dividends that totaled $1.54 a share. Calculate the Hernandezes' total return for this investment

Answer 1

The Hernandezes' total return for this investment is $1178.

Step-by-step explanation:

To calculate the Hernandezes' total return for this investment, we need to consider the initial investment, dividends received, and any commissions paid.

The initial investment is given as 150 shares purchased at $32 per share, so the total initial investment is 150*$32 = $4800.

The total dividend received is the dividend per share multiplied by the number of shares, which is $1.54*$150 = $231. Finally, the commissions paid when purchasing and selling the stock are $9 and $13 respectively.

To calculate the total return, we need to subtract the total initial investment and the commissions paid from the total amount received when selling the stock.

The total amount received is the selling price per share multiplied by the number of shares, which is $40*$150 = $6000.

So the total return is $6000 - $4800 - $9 - $13 = $1178.