Question

100 POINTS!!! SHOW ALL WORK PLZ!!! Tarah bought 42 shares of a company’s stock for $16.45 / share. She pays a broker a commission of $7 to buy and

sell stock. After one year, Tarah sold all her shares, when they were worth $20.64 / share.

How much did it cost Tarah to buy the stock? Show your work.

What was Tarah’s net gain or loss? Show your work.

What was Tarah’s annual rate of return? Show your work, make answer a % and then round to tenths place.

Answer 1

`a) $697.90

b) $161.98 gain

c) 23.2096% annual return rate

Explanation:

a) $16.45 for one share. 42 shares will cost 16.45 x 42 = $690.90

As she used a broker and paid $7, the total cost for Tarah would be $697.90

b) After the investment, Tarah's gain is $20.64 per stock and she had bought 42. So the total income would be 20.64 x 42 = $866.88. However, she used a broker to sell the stocks as well, so the total gain would only be 859.88.

Overall, the cost was -697.90+859.88 = 161.98 net gain.

c) The rate of return would be the percentage of the original price of stocks that is equal to the net gain. What we are trying to find here is:

What percentage of 697.90 is 161.98?

We can find this percentage by doing a simple division (161.98/697.90) which gives us an answer of 0.232096

In percentages, multiply this decimal by 100 to get a 23.2096% annual return.

I hope I am correct, but some of the vocabularies may have messed up my answers. Hope it helps!