Question

Sarah and James Hernandez purchased 250 shares of Macy’s stock at $25 a share. One year later, they sold the stock for $30.00 a share. They paid a broker a commision of $10 when they purchased the stock and a commision of $14 when they sold the stock. During the 12-month period the couple owned the stock, Macy’s paid dividends that totaled $1.84 a share. Calculate the Hernandez total return for this investment. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

Computation of Purchase value of shares

No. of shares	250.00
Purchase price per share	25.00
Total purchase value	6,250.00

Computation of Sale value of shares

Sale price per share	30.00
Total sale value	7,500.00

Total Dividends

Dividend per share	1.84
Total Dividends	460.00

Total commision

Commission on purchase	10.00
Commission on sale	14.00
Total commission	24.00

Net proceeds on holding the shares

Total sale value	7,500.00
Less : Total purchase value	6,250.00
Less : Total commission	24.00
Profit on sale of shares	1,226.00
Add : Total Dividends	460.00
Net proceeds on holding the shares	1,686.00

Return on Investment computation

Net proceeds on holding the shares	1,686.00
Total purchase value	6,250.00
Return on investment	26.98%

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