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  1. #1
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    Math

    How do i do this?? anyone can help me??

    Problem 12 Investments
    The Richardsons purchased 400 shares of GM common stock on June 1 for $33 per share. There are 1,680,000 shares of common stock outstanding and 500,000 shares of $5 preferred stock outstanding. GM reported an annual earning os $7.6 million on November 7. The Richardsons sold their stock on December 1 for $40 per share. They paid a commission rate of 1 % percent on the purchase and on the sale. What was the rate of return?
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  2. #2
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    Some of the information in the problem is not needed.

    Use Starting share price 33*400=13,200
    Subtract out the 1% commission 13,200*.01=13.2

    Ending share price 40*400=16,000

    Profit is 16,000-13,200 minus the commisions 13,200*.01=13.2, 16,000*.01=16
    Total profit =$2,771

    Return in 5 months = 2771/13200 = 21%

    If you are studying anualized return rates, you may want to convert it to an annual rate.
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