Question

Joelle purchased 100 shares of PAC stock for $20 per share and sold this same stock one year later for $25 per share. She paid commissions of $60 when she purchased the stock and $70 when she sold the stock. Dividends of $2 per share were paid during the year. The total rate of return on this investment was

Answer 1

The total rate of return on this investment made by Joelle, who purchased 100 shares of PAC stock for $20, is 26.8%.

What is the rate of return?

The rate of return refers to the percentage of net profit or loss from an investment.

The rate of return can be computed as the total returns divided by the total cost, multiplied by 100.

Data and Calculations:

Cost price of stock = $20 per share

Total cost = $2,000 ($20 x 100)

Sales price per share = $25

Total sales value = $2,500 ($25 x 100)

Commission paid = $130 ($60 + $70)

Dividends received = $200 ($2 x 100)

Total proceeds from the investment = $2,700 ($2,500 + $200)

Total cost of investment = $2,130 ($2,000 + $130)

Total returns in dollars = $570 ($2,700 - $2,130)

Total rate of returns = 26.8% ($570/$2,130 x 100)

Thus, the total rate of return on this investment by Joelle from PAC shares is 26.8%.

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