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Find the rate of return on investment if 500 shares of face value rupess.100 were purchased at rupees 3500 each and sold later at rupees 3670 each,the brokerage being 0.5% on both the transaction?
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Find the rate of return on investment if 500 shares of face value rupe...
Calculation of Investment
To calculate the investment, we need to multiply the number of shares purchased by the purchase price per share.
Investment = Number of shares * Purchase price per share
Investment = 500 shares * Rs. 3500 per share
Investment = Rs. 1,750,000
Calculation of Sales Proceeds
To calculate the sales proceeds, we need to multiply the number of shares sold by the selling price per share.
Sales Proceeds = Number of shares * Selling price per share
Sales Proceeds = 500 shares * Rs. 3670 per share
Sales Proceeds = Rs. 1,835,000
Calculation of Brokerage
Brokerage is charged on both the purchase and sale of shares. The brokerage rate is given as 0.5% on both transactions.
Brokerage on Purchase = Investment * Brokerage rate
Brokerage on Purchase = Rs. 1,750,000 * 0.5/100
Brokerage on Purchase = Rs. 8,750
Brokerage on Sale = Sales Proceeds * Brokerage rate
Brokerage on Sale = Rs. 1,835,000 * 0.5/100
Brokerage on Sale = Rs. 9,175
Net Investment
Net Investment is the investment amount minus the brokerage on purchase.
Net Investment = Investment - Brokerage on Purchase
Net Investment = Rs. 1,750,000 - Rs. 8,750
Net Investment = Rs. 1,741,250
Net Sales Proceeds
Net Sales Proceeds is the sales proceeds amount minus the brokerage on sale.
Net Sales Proceeds = Sales Proceeds - Brokerage on Sale
Net Sales Proceeds = Rs. 1,835,000 - Rs. 9,175
Net Sales Proceeds = Rs. 1,825,825
Calculation of Rate of Return on Investment
The rate of return on investment can be calculated using the following formula:
Rate of Return = (Net Sales Proceeds - Net Investment) / Net Investment * 100
Rate of Return = (Rs. 1,825,825 - Rs. 1,741,250) / Rs. 1,741,250 * 100
Rate of Return = Rs. 84,575 / Rs. 1,741,250 * 100
Rate of Return ≈ 4.86%
Explanation
The rate of return on investment is approximately 4.86%. This means that the investment has earned a profit of 4.86% based on the initial investment amount. The brokerage charges on both the purchase and sale of shares have been taken into account to calculate the net investment and net sales proceeds. The rate of return is a measure of the profitability of an investment and helps investors assess the performance of their investment. In this case, the rate of return indicates a positive return, indicating a profit on the investment.
To calculate the investment, we need to multiply the number of shares purchased by the purchase price per share.
Investment = Number of shares * Purchase price per share
Investment = 500 shares * Rs. 3500 per share
Investment = Rs. 1,750,000
Calculation of Sales Proceeds
To calculate the sales proceeds, we need to multiply the number of shares sold by the selling price per share.
Sales Proceeds = Number of shares * Selling price per share
Sales Proceeds = 500 shares * Rs. 3670 per share
Sales Proceeds = Rs. 1,835,000
Calculation of Brokerage
Brokerage is charged on both the purchase and sale of shares. The brokerage rate is given as 0.5% on both transactions.
Brokerage on Purchase = Investment * Brokerage rate
Brokerage on Purchase = Rs. 1,750,000 * 0.5/100
Brokerage on Purchase = Rs. 8,750
Brokerage on Sale = Sales Proceeds * Brokerage rate
Brokerage on Sale = Rs. 1,835,000 * 0.5/100
Brokerage on Sale = Rs. 9,175
Net Investment
Net Investment is the investment amount minus the brokerage on purchase.
Net Investment = Investment - Brokerage on Purchase
Net Investment = Rs. 1,750,000 - Rs. 8,750
Net Investment = Rs. 1,741,250
Net Sales Proceeds
Net Sales Proceeds is the sales proceeds amount minus the brokerage on sale.
Net Sales Proceeds = Sales Proceeds - Brokerage on Sale
Net Sales Proceeds = Rs. 1,835,000 - Rs. 9,175
Net Sales Proceeds = Rs. 1,825,825
Calculation of Rate of Return on Investment
The rate of return on investment can be calculated using the following formula:
Rate of Return = (Net Sales Proceeds - Net Investment) / Net Investment * 100
Rate of Return = (Rs. 1,825,825 - Rs. 1,741,250) / Rs. 1,741,250 * 100
Rate of Return = Rs. 84,575 / Rs. 1,741,250 * 100
Rate of Return ≈ 4.86%
Explanation
The rate of return on investment is approximately 4.86%. This means that the investment has earned a profit of 4.86% based on the initial investment amount. The brokerage charges on both the purchase and sale of shares have been taken into account to calculate the net investment and net sales proceeds. The rate of return is a measure of the profitability of an investment and helps investors assess the performance of their investment. In this case, the rate of return indicates a positive return, indicating a profit on the investment.
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Find the rate of return on investment if 500 shares of face value rupess.100 were purchased at rupees 3500 each and sold later at rupees 3670 each,the brokerage being 0.5% on both the transaction?
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Find the rate of return on investment if 500 shares of face value rupess.100 were purchased at rupees 3500 each and sold later at rupees 3670 each,the brokerage being 0.5% on both the transaction? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Find the rate of return on investment if 500 shares of face value rupess.100 were purchased at rupees 3500 each and sold later at rupees 3670 each,the brokerage being 0.5% on both the transaction? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Find the rate of return on investment if 500 shares of face value rupess.100 were purchased at rupees 3500 each and sold later at rupees 3670 each,the brokerage being 0.5% on both the transaction?.
Find the rate of return on investment if 500 shares of face value rupess.100 were purchased at rupees 3500 each and sold later at rupees 3670 each,the brokerage being 0.5% on both the transaction? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Find the rate of return on investment if 500 shares of face value rupess.100 were purchased at rupees 3500 each and sold later at rupees 3670 each,the brokerage being 0.5% on both the transaction? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Find the rate of return on investment if 500 shares of face value rupess.100 were purchased at rupees 3500 each and sold later at rupees 3670 each,the brokerage being 0.5% on both the transaction?.
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