Question

For four years, Marty Campbell invested $8,500 each year in Harley-Davidson. The stock was selling for $72 in 2014, $74 in 2015, $56 in 2016, and $74 in 2017. a. What is Marty's total investment in Harley-Davidson? b. After four years, how many shares does Marty own? (Do not round intermediate calculations. Round your answer to 1 decimal place.) c. What is the average cost per share of Marty's investment? (Use the rounded number of shares computed in part b. Round your answer to 2 decimal places.)

Answer 1

a.

Total investment = $34000

b.

Total number of shares = 499.6 shares

c.

The average cost per share was $68.05

Step-by-step explanation:

a.

As Marty invested $8500 each year for four years, then she invested a total of 8500 * 4 = $34000 in Harley Davidson stock over the four year period.

So, her total investment is $34000

b.

The number of shares owned by Marty can be calculated by dividing the total amount invested each year by the share price for that year.

Number of shares = TI Year 1 / SP Year 1 + TI Year 2 / SP Year 2 + .... +

TI Year n / SP Year n

Where,

• TI represents total investment in a year
• SP represents share price per share in a year

Number of shares = 8500 / 72 + 8500 / 74 + 8500 / 56 + 8500 / 74

Number of shares = 499.570 rounded off to 499.6 shares

c.

The average cost per share can be calculated by dividing the total investment in shares over the four years by the total number of shares.

Average cost per share = Total Investment in Shares / Total number of shares

Average cost per share = 34000 / 499.6

Average cost per share = $68.054 rounded off to $68.05