07.01 Return on Investment
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