You purchase 259 shares of Sonic Corporation for $24.38 per share. What is the total cost of your purchase? You later sell your shares at the current market price of $22.12. How much money was your profit or loss? Explain how you calculated your answer.

2 Answers
Feb 14, 2018

Answer:

See a solution process below:

Explanation:

Part A:

We can find the total cost of the purchase by multiplying the number of shares by the prices per share giving:

#259 "shares" xx ($24.38)/"share" =>#

#259 color(red)(cancel(color(black)("shares"))) xx ($24.38)/color(red)(cancel(color(black)("share"))) =>#

#259 xx $24.38 => $6314.42#

Part B:

We can do the same calculation to find what was made by selling the 259 shares at $22.12:

#259 "shares" xx ($22.12)/"share" =>#

#259 color(red)(cancel(color(black)("shares"))) xx ($22.12)/color(red)(cancel(color(black)("share"))) =>#

#259 xx $22.12 => $5729.08#

The profit or loss is found by subtracting what you paid from what you made. Or, in this problem:

#$5729.08 - $6314.42 = -$585.34#

Because the answer is negative you lost $585.34 on the transaction.

Feb 14, 2018

Answer:

Loss of #$585.34#

Explanation:

You buy 259 shares with each one costing $24.38. In order to calculate the total amount of money it costs you need to multiply the two numbers.

#"Total" = 259 * $24.38 = $6314.42#

Later the shares are sold at $22.12, to calculate the amount of money lost/gained you need to first know how much you are selling the shares for. The amount of shares remains the same.

#"Selling Price" = 259 * $22.12 = $5729.08#

Now we calculate the difference of the starting amount and the resulting amount.

#"Difference" = $6314.42 - $5729.08 = $585.34#

Although this number is positive it still represents a loss of money because we are subtracting the outcome from the original amount.

Side Note: You could tell from the beginning that this was a loss of money because the selling price was less than the buying price.