An investor purchased 50 shares of stock in a company in 2015. At the time the investor purchased the stock, the value of the stock was priced at $5 per share. The investor sold all 50 shares of stock in 2019. The value of the stock at the time of sale was $6.50 per share. What is the capital gain the investor earned on this investment?(1 point)

Question

Responses

$75
$75

$325
$325

$50
$50

$250
$250

Answer 1

To calculate the capital gain, you can use the following formula:

\[ \text{Capital Gain} = (\text{Selling Price per Share} - \text{Purchase Price per Share}) \times \text{Number of Shares} \]

1. Purchase Price per Share: $5
2. Selling Price per Share: $6.50
3. Number of Shares: 50

Now, substituting the values into the formula:

\[ \text{Capital Gain} = (6.50 - 5) \times 50 \] \[ = 1.50 \times 50 \] \[ = 75 \]

Thus, the capital gain the investor earned on this investment is $75.