Tommy bought 35 shares of stock at $45.75 per share. He received dividends of $82.45 during the year. At the end of the year, his stock was valued at $48.23 per share. What was his ROI

Question

Enrique Castro

Business

29 August, 15:05

Tommy bought 35 shares of stock at $45.75 per share. He received dividends of $82.45 during the year. At the end of the year, his stock was valued at $48.23 per share. What was his ROI

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Blankenship · Answer 1

10.57%

Explanation:

Return on investment is a profitability measure of gains realized from an investment. It is a ratio that shows how a business uses its resources to generate profits. Return on investment compares the net income against the initial investment.

ROI = Net Income / Cost of Investment

For Tommy,

The initial investment is 35 x $45.75 = $1,601.25

The gains from the investments

Dividends of $82.45

Gains in share value = 35 x ($48. 75 - $45.43)

35 x 2.48 = $86.8

Net gains will be $82.45 + $86.8 = $169.25

ROI = $169.25/$1601.25

ROI = 0.10569 X 100

=10.57%