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1 December, 04:03

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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  1. 1 December, 05:43
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    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%
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