Abby purchased 100 shares of her father\'s favorite stock for $28 per share exac
ID: 1149004 • Letter: A
Question
Abby purchased 100 shares of her father's favorite stock for $28 per share exactly 1 year ago, commission free. She sold it today for a total amount of $3150. She plans to invest the entire amount in a different corporation's stock today, but she must now pay a $45 commission fee. If she plans to sell this new stock exactly 1 year from now and realize the same return as she has just made, what must be the total amount she receives next year? Include the commission fee as a part of the purchase price, but neglect any tax effects The total amount that she receives next year is $Explanation / Answer
Sale price per share = 3150/100 = $ 31.5
Return percentage = (31.5 - 28)/28 x 100 = 12.5%
Total amount invested = $ 3150
To realize the same return, she would need to receive:
= 3150 x (1 + 12.5%) = $3543.75