Question

Debby, Ella and Unique invest $10,000 each into an oil company. Debby owns 2000 $1 common stocks, Ella owns 1000 of 5% $50 preferred stocks and Unique owns 2000 of 4% $20 preferred stocks. If the company pays $0.80 per share to common stockholders in the current year. Who will have the greatest return in the current year?

Answer 1

Ella has the greatest return in the current year.

Explanation:

Debby would receive $0.80 for each of her 2000 common stock in the oil company,hence Debby's return on investment in the current year is $1600($0.80*2000)

Besides,Ella's return on the stock investment in the current year is computed thus:

Ella's return= 5%*1000*$50=$2,500

In addition,Unique's dollar return on the investment is computed as follows:

Unique's return on investment=4%*2000*$20=$1,600

From the above computations,Ella seems to have the highest return in the current year of $2,500 whereas the two others managed to have $1600 return each