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Calculate percentage gain stock transactions

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Suppose you buy a round lot of Horse Inc stock on 55% margin when it is selling at 38.70 a share. The broker charges an 8 percent annual interest rate and commission are 4.5 percent of the total stock value on the purchase and 5 percent o n the sell. If at year-end you receive a 1.60 per share dividend and sell the stock for 47.30, what is your profit and return on the investment?

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Solution Summary

The solution calculates the real gain after commission, margin borrowing and dividends.

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Cost of stock: 38.70 x 100 = $3870
Commission: $3870 x .045 = $174.15
Margin interest: 3870.00 + 174.15 = 4044.15 x .55 = 2224.28 x 8% = 177.94
Sale of stock: 47.30 x 100 = $4730
Commission on ...

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