You purchased 2,000 shares of Crimson Treat Technologies several years ago at $50 per share. The company does not pay a regular cash dividend. You want to manufacture your own dividend by selling a little bit of stock each quarter. The company's stock is currently trading at $75. If capital gains are taxed at 15 percent, how many shares would you have to sell to receive $3,420 in cash?

Question

Quizplus · Accepted Answer

To determine how many shares you need to sell, you can use the following formula:

Shares to sell = (desired cash amount) / (selling price per share - purchase price per share)

In this case, the desired cash amount is $3,420 and the selling price per share is $75, while the purchase price per share is $50. Plugging these values into the formula, we get:

Shares to sell = ($3,420) / ($75 - $50) = 48 shares

Therefore, you would need to sell 48 shares to receive $3,420 in cash.

You Purchased 2,000 Shares of Crimson Treat Technologies Several Years