Tammy Jackson purchased 100 shares of All-American Manufacturing Company stock at $28.25 a share. One year later, she sold the stock for $36 a share. She paid her broker a $22 commission when she purchased the stock and a $15 commission when she sold it. During the 12 months she owned the stock, she received $110 in dividends. Calculate Tammy’s total return on this investment.

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kellygomesvk4 kellygomesvk4 · Answer 1 · 2024-04-03T01:36:24+02:00

Answer:Tammy's total return on this investment is $848.

Step-by-step explanation:

To calculate Tammy's total return on her investment, we need to consider the following components:

Initial investment (purchase price + commission)

Final sale value (selling price - commission)

Dividends received during the holding period

Let's break down each component:

Initial investment:

Purchase price per share: $28.25

Number of shares purchased: 100

Commission paid when purchasing: $22

Total initial investment = (100 shares * $28.25 per share) + $22 commission

Final sale value:

Selling price per share: $36

Commission paid when selling: $15

Total sale value = (100 shares * $36 per share) - $15 commission

Dividends received: $110

Now, let's calculate each component:

Initial investment:

Total initial investment = (100 * $28.25) + $22

= $2825 + $22

= $2847

Final sale value:

Total sale value = (100 * $36) - $15

= $3600 - $15

= $3585

Dividends received: $110

Now, let's calculate the total return:

Total return = (Final sale value + Dividends received) - Initial investment

= ($3585 + $110) - $2847

= $3695 - $2847

= $848