Original Cost of Investment Selling Price of Investment Distributions Investment Received Percent Return CD $800 $810 $0 ? $28 $40 $1 $120 Stock ? Bond Bicycle $910 $820 ? $580 $150 $0 ?
Original Cost of Investment Selling Price of Investment Distributions Investment Received Percent Return CD $800 $810 $0 ? $28 $40 $1 $120 Stock ? Bond Bicycle $910 $820 ? $580 $150 $0 ?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**Returns Calculation for Investments**
The table below displays the components needed to calculate the returns on the following investment:
| **Investment** | **Original Cost of Investment** | **Selling Price of Investment** | **Distributions Received** | **Percent Return** |
|----------------|-------------------------------|-------------------------------|---------------------------|-------------------|
| CD | $800 | $810 | $0 | \_\_% (Round to two decimal places.) |
To determine the percent return on the investment detailed in the table:
1. **Original Cost of Investment:** The initial amount spent on the investment, which is $800.
2. **Selling Price of Investment:** The amount for which the investment was sold, which is $810.
3. **Distributions Received:** Any additional earnings received from the investment during its holding period, which is $0 in this case.
4. **Percent Return:** Calculated by taking the profit from the investment (Selling Price - Original Cost) and adding any distributions received. Divide the result by the Original Cost of Investment and multiply by 100 to get a percentage. Round this value to two decimal places.
This formula helps in evaluating the effectiveness of the investment.
![The table displays information about four different types of investments, detailing their original cost, selling price, distributions received, and percent return. Here's an overview:
| Investment | Original Cost of Investment | Selling Price of Investment | Distributions Received | Percent Return |
|------------|-----------------------------|-----------------------------|-----------------------|----------------|
| CD | $800 | $810 | $0 | ? |
| Stock | $28 | $40 | $1 | ? |
| Bond | $910 | $820 | $120 | ? |
| Bicycle | $580 | $150 | $0 | ? |
### Explanation:
- **CD Investment**: Originally costs $800 and is sold for $810, with no distributions received. The percent return is not calculated yet.
- **Stock Investment**: Initially costs $28, with a selling price of $40 and $1 received in distributions. The percent return is to be determined.
- **Bond Investment**: Has an original cost of $910, sold for $820, and $120 received in distributions. The percent return is not provided.
- **Bicycle Investment**: Bought for $580 and sold for $150, with no distributions received. The percent return remains unknown.
The table suggests calculating the percent return for each investment, which can be determined using the formula:
\[
\text{Percent Return} = \left( \frac{\text{Selling Price} + \text{Distributions Received} - \text{Original Cost}}{\text{Original Cost}} \right) \times 100
\]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F353eec08-b3f3-4175-a026-2d0234ecbc5b%2Fa9f5a069-511c-4e0f-a038-a2a1bdf272a3%2Fw7n3eil_processed.png&w=3840&q=75)
Transcribed Image Text:The table displays information about four different types of investments, detailing their original cost, selling price, distributions received, and percent return. Here's an overview:
| Investment | Original Cost of Investment | Selling Price of Investment | Distributions Received | Percent Return |
|------------|-----------------------------|-----------------------------|-----------------------|----------------|
| CD | $800 | $810 | $0 | ? |
| Stock | $28 | $40 | $1 | ? |
| Bond | $910 | $820 | $120 | ? |
| Bicycle | $580 | $150 | $0 | ? |
### Explanation:
- **CD Investment**: Originally costs $800 and is sold for $810, with no distributions received. The percent return is not calculated yet.
- **Stock Investment**: Initially costs $28, with a selling price of $40 and $1 received in distributions. The percent return is to be determined.
- **Bond Investment**: Has an original cost of $910, sold for $820, and $120 received in distributions. The percent return is not provided.
- **Bicycle Investment**: Bought for $580 and sold for $150, with no distributions received. The percent return remains unknown.
The table suggests calculating the percent return for each investment, which can be determined using the formula:
\[
\text{Percent Return} = \left( \frac{\text{Selling Price} + \text{Distributions Received} - \text{Original Cost}}{\text{Original Cost}} \right) \times 100
\]
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