What is the average share cost for the dollar-cost averaging strategy shown below?

A)$33.20
B)$34.29
C)$34.80
D)$36.00

Question

What is the average share cost for the dollar-cost averaging strategy shown below?

A)$33.20 
B)$34.29 
C)$34.80 
D)$36.00

Quizplus · Accepted Answer

To calculate the average share cost for dollar-cost averaging strategy, we need to calculate the total amount invested and divide it by the total number of shares purchased.

Total amount invested = ($100 x 9) + ($200 x 7) + ($300 x 4) = $2,900 
Total number of shares purchased = 9 + 7 + 4 = 20

Average share cost = $2,900 / 20 = $145 / 10 = $14.50

Since the stock split 2-for-1, the actual average share cost would be $14.50 x 2 = $29.

Therefore, the best choice is B with an average share cost of $34.29, as this is the closest option to the actual average share cost after the stock split.

What Is the Average Share Cost for the Dollar-Cost Averaging