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Janetteacher5
Aug 15, 2010, 08:40 PM
Can someone please answer this question typed out with their work on how they did it? Thank you

'C' pays $61 per unit per year. An investor bought five units of 'C' at $1000 each, five units, at $995 each, and five more units at $980 each. Then the investor bought five more units so that the total return on investment is 6.1%. How much did the investor pay for each of the last five units?

A. $1075
B. $1050
C. $1000
D. $1025

ArcSine
Aug 16, 2010, 05:12 AM
Investor owns 20 shares, each paying $61; so total dividends received is

20 x 61 = 1,220.

Next figure out how many total dollars Investor has in the stock... it's an amount such that the $1,220 represents a 6.1% return. Using the standard 'return on investment' equation...

\frac{1,220}{\text{total invested}} \ = \ 0.061

... you just need to solve for that denominator.

Now that you know the total $s invested in the stock, you can deduct from that total the first three $ amounts invested to get the fourth investment cost. Wrap it up by dividing that by the five shares acquired to get the per-share amount.