On July 3, 2009, Devin purchased 100 shares of CDEF stock at a cost of $30 per share. His commission was $29. He sold his shares on July 6, 2011, at a price of $45 per share less another $29 commission. During the time he held the stock, he earned dividends of $2.50 per share. What was his total return on his investment?

Question

Quizplus · Accepted Answer

To calculate Devin's total return, we need to calculate his initial cost, final sale price, and any dividends he earned.

Devin's initial cost: 
100 shares x $30 per share = $3000 
Commission = $29 
Total initial cost = $3000 + $29 = $3029

Devin's final sale price: 
100 shares x $45 per share = $4500 
Commission = $29 
Total final sale price = $4500 - $29 = $4471

Dividends earned: 
100 shares x $2.50 per share = $250

To calculate his total return, we can use the following formula: 
Total return = (final sale price + dividends earned - initial cost)/initial cost

Plugging in the values: 
Total return = ($4471 + $250 - $3029)/$3029 
Total return = $1692/$3029 
Total return = 0.558 or 55.8%

Therefore, Choice C ($1,692) is the correct answer.

On July 3, 2009, Devin Purchased 100 Shares of CDEF