Question

An investor purchased 100 shares of stock x at \small 6\frac{1}{8} dollars per share and sold them all a year later at 24 dollars per share. if the investor paid a 2 percent brokerage fee on both the total purchase price and the total selling price, which of the following is closest to the investor's percent gain on this investment? (a) 92%(b) 240%(c) 280%(d) 300%(e) 380%

Answer 1

Answer:

(c) 280%

Explanation:

Given that

Number of shares purchased = 100 shares

Purchase cost of a share = 49 ÷ 8

Sale price of a share = $24

And, brokerage paid = 2%

Now the purchase cost is

= 100 shares × 49 ÷ 8 + 2% × 100 shares × 49 ÷ 8

= $612.5 + 0.02 ×$612.50

= $624.75

And, the income amount arise from the sales is

= $24 × 100 - 2% of $2,400

= $2,400 - $48

= $2,352

Now the percentage gain on the investment is

= (Income - purchase amount invested)  ÷ (Purchase amount invested) × 100

= ($2,352 - $624.75) ÷ ($624.75) × 100

= ($1,727.25) ÷ ($624.75) × 100

= 276.43% or 280%