Question

gunther earned a 62.5 percent return on a stock that he purchased one year ago. the stock is now worth $12, and he received a dividend of $1 during the year. how much did gunther originally pay for the stock? select answer from the options below $7.00 $8.50 $8.00 $7.50

Answer 1

Gunther originally paid $8.00 for the stock.

Step-by-step explanation:

To find out how much Gunther originally paid for the stock, we can set up an equation using the given information:

Return on investment = (Stock value - Original price + Dividend) / Original price

Plugging in the values, we get:

62.5% = (12 - Original price + 1) / Original price

Simplifying the equation, we have:

0.625 = (13 - Original price) / Original price

Multiplying both sides by Original price, we get:

0.625 * Original price = 13 - Original price

1.625 * Original price = 13

Original price = 13 / 1.625

Original price = $8.00

Therefore, Gunther originally paid $8.00 for the stock.

Answer 2

Gunther originally paid $8.00 for the stock, calculated by accounting for the return of 62.5% and the dividend of $1 on the current stock value of $12.

Step-by-step explanation:

To calculate the original amount Gunther paid for the stock, we need to take into account the return and the dividend received. Gunther's return is 62.5%, and the current stock value is $12 with a dividend of $1. The total return Gunther received is from the increase in stock value (capital gain) and the dividend. The return can be calculated using the formula:

Return = (Current Value + Dividend - Original Value) / Original Value

Plugging in the values gives us:

0.625 = ($12 + $1 - Original Value) / Original Value

We solve this equation for the Original Value:

0.625 * Original Value = $12 + $1 - Original Value

1.625 * Original Value = $13

Original Value = $13 / 1.625

Original Value = $8

Therefore, Gunther originally paid $8.00 for the stock.