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.
See a solution process below:
We can find the total cost of the purchase by multiplying the number of shares by the prices per share giving:
We can do the same calculation to find what was made by selling the 259 shares at $22.12:
The profit or loss is found by subtracting what you paid from what you made. Or, in this problem:
Because the answer is negative you lost $585.34 on the transaction.
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.
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.
Now we calculate the difference of the starting amount and the resulting amount.
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.