Bali purchases 75 shares of a stock for $37.75. In 7 years, he sells the stock for $3,190.19. He calculates his ROI, shown below. Did he do this correctly? If not, what error did he make?
37.75(75) - 3190.19/37.75(75)= -12.7% ROI
A. Yes, he solved it correctly.
B. No, he divided by the wrong number.
C. No, he should have a positive ROI.
D. No, he incorrectly calculated his initial investment.
I'm not too sure about this one, I think either d or c.
It’s option D. He incorrectly calculated his initial investment.
The correct answer is C. No, he should have a positive ROI.
To calculate ROI (Return on Investment), you need to subtract the initial investment from the final value, and then divide the result by the initial investment.
Let's calculate the ROI step-by-step:
Step 1: Calculate the initial investment.
Initial investment = 37.75 (price per share) * 75 (number of shares) = $2,831.25
Step 2: Calculate the ROI.
ROI = (Final Value - Initial Investment) / Initial Investment
ROI = (3190.19 - 2831.25) / 2831.25
ROI = 358.94 / 2831.25
ROI = 0.1266 or 12.66%
Therefore, the correct ROI is 12.66%. Bali made an error in his calculation.
To calculate the ROI (Return on Investment), you need to first determine the initial investment and the final value of the investment.
The initial investment is given as 75 shares of stock purchased for $37.75. Therefore, the initial investment would be 75 x $37.75 = $2,831.25.
The final value of the investment is given as $3,190.19.
To calculate ROI, you can use the formula: ROI = (Final Value - Initial Investment) / Initial Investment x 100
Let's substitute the values into the formula:
ROI = ($3,190.19 - $2,831.25) / $2,831.25 x 100
= $358.94 / $2,831.25 x 100
= 0.1268 x 100
= 12.68%
Comparing this calculated ROI with the given calculation: -12.7% ROI, we find they are different.
Therefore, the correct answer is B. No, he divided by the wrong number. He divided the difference between the values ($3,190.19 - $2,831.25) by $37.75(75), which is incorrect.
investment = 37.75(75) = 2831.25
selling price = 3,190.19
profit = 3,190.19 - 2831.25 = 358.94
rate of investment = 358.94/2831.25 = .12377.. or appr 12.38%
his calculation should have been:
(3190.19 - 37.75(75) / (37.75(75))
the correct choices would have been C AND D