Math Problem Statement

Suppose you bought XYZ stock 1 year ago for

​$5.485.48

per share and sell it at

​$8.588.58.

You also pay a commission of

​$0.250.25

per share on your sale. What is the total return on your​ investment?

Question content area bottom

Part 1

The total return is

enter your response here​%.

​(Round to the nearest tenth as​ needed.)\

Solution

To calculate the total return on your investment, we need to follow these steps:

Formula for Total Return:

Total Return=Selling PricePurchase PriceCommissionPurchase Price×100\text{Total Return} = \frac{\text{Selling Price} - \text{Purchase Price} - \text{Commission}}{\text{Purchase Price}} \times 100

Given values:

  • Purchase Price: $5.48 per share
  • Selling Price: $8.58 per share
  • Commission: $0.25 per share

Step-by-step calculation:

  1. Calculate the net selling price: Net Selling Price=Selling PriceCommission=8.580.25=8.33\text{Net Selling Price} = \text{Selling Price} - \text{Commission} = 8.58 - 0.25 = 8.33

  2. Calculate the total return: Total Return=8.335.485.48×100\text{Total Return} = \frac{8.33 - 5.48}{5.48} \times 100 Total Return=2.855.48×10052.0%\text{Total Return} = \frac{2.85}{5.48} \times 100 \approx 52.0\%

Final Answer:

The total return on your investment is approximately 52.0%.


Do you need further clarification on this calculation? Or any additional details?

Related Questions:

  1. How would your total return change if the commission was higher?
  2. What would the return percentage be if the stock price decreased instead of increased?
  3. How can you calculate total return if dividends were received during the year?
  4. What is the difference between total return and annualized return?
  5. How would your total return be affected by holding the stock for 2 years instead of 1 year?

Tip:

When calculating returns, always consider both the purchase price and any costs, such as commissions or fees, to get an accurate measure of your profitability.

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Math Problem Analysis

Mathematical Concepts

Financial Mathematics
Return on Investment
Percentages

Formulas

Total Return = ((Selling Price - Purchase Price - Commission) / Purchase Price) * 100

Theorems

Return on Investment Calculation

Suitable Grade Level

Grades 10-12