Ask Question
BusinessBusiness
2 December, 05:22

On January 1, 20X1, Jennifer purchases common stock of Gamma Corporation for $100,000. During the year, Gamma Corporation stock pays a dividend of $3,000. At the end of the year, Jennifer sells the Gamma stock for $104,000. What is the return on investment of the Gamma stock?

+2
Answers (1)
  1. 2 December, 07:46
    0
    7%

    Explanation:

    Return on investment (ROI) is a very popular and simple profitability ratio used by financial and business analyst to test the profitability or otherwise of an investment. It is always calculated by dividing the net income by the Cost of Investment, expressed as a percentage.

    ROI = (Net Income / Cost of Investment) x 100%

    Net Income = Capital gain + dividend received

    Capital gain = Sales of stock - Cost of stock

    = $104,000 - $100,000 = $4,000

    Dividend = $3,000

    Net Income = $4,000 + $3,000 = $7,000

    Cost of Investment = $100,000

    ROI = ($7,000 / $100,000) x 100%

    ROI = (0.07) x 100%

    ROI = 7%

    Therefore, the return on investment of the Gamma stock is 7%.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “On January 1, 20X1, Jennifer purchases common stock of Gamma Corporation for $100,000. During the year, Gamma Corporation stock pays a ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
On September 1, Ziegler Corporation had 58,000 shares of $5 par value common stock, and $174,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split.
Answers (2)
Assume that Delalo, Inc. is operating at full capacity. Also assume that assets, costs, and current liabilities vary directly with sales. The dividend payout ratio is constant. What is the external financing needed if sales increase by 10 percent?
Answers (2)
The stockholders' equity section of Pretzer Corporation consists of common stock ($10 par) $2,650,000 and retained earnings $532,000. A 10% stock dividend (26,500 shares) is declared when the market price per share is $14.
Answers (1)
Which of the following is true about a business plan? Select one: a. Developing it is a simple and straightforward. b. Once developed, it doesn't change. c. It has a set format. d. It will need to be changed from time to time.
Answers (1)
DeKay Dental Supplies issued $10,000 of bonds on January 1, 2018. The bonds pay interest semiannually.
Answers (1)
New Questions in Business
Which of the elements of this scenario represent a flow from a household to a firm? this could be a flow of dollars, inputs, or outputs. check all that apply.
Answers (1)
Bob has the responsibility for product development, pricing, promotion, and distribution of Hi-Vee Vitamins for children. Bob's job would not involve:
Answers (1)
Which one of the following correctly describes the dividend yield? Multiple Choice Next year's annual dividend divided by today's stock price This year's annual dividend divided by today's stock price This year's annual dividend divided by next
Answers (1)
The Hopkinton Company just paid $2.25 as its annual dividend. The dividends have been increasing at a rate of 5% annually and this trend is expected to continue. The stock is currently selling for $63.60 a share.
Answers (1)
The primary method for sterilizing instruments is
Answers (1)
Home » Business » On January 1, 20X1, Jennifer purchases common stock of Gamma Corporation for $100,000. During the year, Gamma Corporation stock pays a dividend of $3,000. At the end of the year, Jennifer sells the Gamma stock for $104,000.
Sign Up Forgot Password?