Answer:
7%
Explanation:
Return on investment (ROI) is a very popular and simple profitability ratio used by financial and business analyst to test the profitability or otherwise of an investment. It is always calculated by dividing the net income by the Cost of Investment, expressed as a percentage.
ROI = (Net Income / Cost of Investment) x 100%
Net Income = Capital gain + dividend received
Capital gain = Sales of stock - Cost of stock
= $104,000 - $100,000 = $4,000
Dividend = $3,000
Net Income = $4,000 + $3,000 = $7,000
Cost of Investment = $100,000
ROI = ($7,000 / $100,000) x 100%
ROI = (0.07) x 100%
ROI = 7%
Therefore, the return on investment of the Gamma stock is 7%.
