Question

In april 2011, consolidated edison (ed) stock cost $50 per share and yielded 5% per year in dividends, while national grid (ngg) stock cost $50 per share and yielded 6% per year in dividends.† if you invested a total of $52,500 in these stocks and earned $2,815 in dividends in a year, how many shares of each stock did you purchase?

Answer 1

Total amount Invested = 52,500

Since both stocks cost 50, total number of share he purchased = 52,500/50 = 1,050 shares

Total number of shares = 1,050

Let x be the total number of Ed shares.  Therefore Ngg shares = 1050-x

Ed Stock dividend return = x*0.05*50

Ngg stock dividend return = (1050-x)*0.06*50

Since total was  2,815, we add and equate the two as shown below:

x*0.05*50 + (1050-x)*0.06*50 = 2815

2.5x + 3150 -3x = 2815

0.5x = 335

x 335/0.5

x = 670 shares

Ed stock = 670 shares

Ngg stock =1050-670 = 380 shares

So, you purchased 670 shares of consolidated edison (ed) stock and 380 shares of national grid (ngg) stock