07.01 Return on Investment

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EXAMPLE 2: GAIN IN DIVIDENDS Jan bought 30 shares of stock at $25.00 per share. The company paid dividends of $1.00 per share last year. How much did she make on her dividends (in dollars) and what was her ROI?

SOLUTION: 30 X $25.00 = $750.00 purchase price30 X $1.00 = $30.00 profit in dividends$30.00 / $750.00 = .04 or 4.0% ROI

EXAMPLE 1: GAIN IN PRINCIPAL Bill bought 40 shares of stock at $22.15 per share. A year later, he sold them for $28.90 a share. How much did he make in dollars, and what was his return on investment (ROI)?

SOLUTION: 40 X $22.15 = 886.00 purchase price 40 X $28.90 = 1156.00 sales price $1156.00 - $886.00 = 270.00 profit in dollars $270.00 / $886.00 = .304 or 30.4 ROI

Return on Investments (ROI)

total profit/purchase price

gain value

value at end of year - Purchase Price

profit in dollars

(#of shares*cost per share (one year later)) - (#of shares*cost per share (original))

Janice bought 40 shares of stock at $31.82 per share. She received dividends of $1.11 per share for 1 year. What was her purchase price?

1,272.8

Chiko bought 75 shares of stock at $19.58 per share. He received dividends of $73.42 during the year. At the end of the year, his stock was valued at $22.14. What was his purchase price?

1,468.5

Chiko bought 75 shares of stock at $19.58 per share. He received dividends of $73.42 during the year. At the end of the year, his stock was valued at $22.14. What was his value at the end of the year?

1,660.5

Maurice bought 25 shares of stock at $9.85 per share and sold them for $11.22 per share. What was his ROI?

13.7

Chiko bought 75 shares of stock at $19.58 per share. He received dividends of $73.42 during the year. At the end of the year, his stock was valued at $22.14. What was his ROI?

18.07

Chiko bought 75 shares of stock at $19.58 per share. He received dividends of $73.42 during the year. At the end of the year, his stock was valued at $22.14. What was his gain in value?

192

Maurice bought 25 shares of stock at $9.85 per share and sold them for $11.22 per share. What was his purchase price?

246.25

Chiko bought 75 shares of stock at $19.58 per share. He received dividends of $73.42 during the year. At the end of the year, his stock was valued at $22.14. What was his total profit?

265.42

Maurice bought 25 shares of stock at $9.85 per share and sold them for $11.22 per share. What was his sales price?

280.5

Janice bought 40 shares of stock at $31.82 per share. She received dividends of $1.11 per share for 1 year. What was her ROI?

3.45

Maurice bought 25 shares of stock at $9.85 per share and sold them for $11.22 per share. What was his profit in dollars?

34.25

Janice bought 40 shares of stock at $31.82 per share. She received dividends of $1.11 per share for 1 year. What was her profit in dividends?

44.4

EXAMPLE 3: GAIN IN PRINCIPAL AND DIVIDENDS Jack bought 50 shares of stock at $18.22 per share. That year, he received total dividends of $72.88. At the end of the year, his stock was valued at $19.11 per share. What was his ROI?

SOLUTION: 50 X $18.22 = $911.00 purchase price50 X $19.11 = $955.50 value at end of year$955.50 - $911.00 = $44.50 gain in value$44.50 + $72.88 = $117.38 total profit$117.38 / $911.00 = 0.1288 or 12.8%

Formula

Total gain/original purchase price

total profit

gain in valule - total dividends


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