An investor purchased 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 a the time of sale was $6.50 per share. What is the capital gain the investor earned on this investment?

Question

a. $75
b. $250
c. $325
d. $50

Answer 1

To calculate the capital gain, we first need to determine the purchase price and the selling price of the shares.

1. Purchase Price:

   • Number of shares purchased: 50
   • Purchase price per share: $5
   • Total purchase cost = Number of shares × Purchase price per share \[ 50 \text{ shares} \times 5 \text{ dollars/share} = 250 \text{ dollars} \]

2. Selling Price:

   • Selling price per share: $6.50
   • Total selling price = Number of shares sold × Selling price per share \[ 50 \text{ shares} \times 6.50 \text{ dollars/share} = 325 \text{ dollars} \]

3. Capital Gain:

   • Capital gain = Total selling price - Total purchase cost \[ 325 \text{ dollars} - 250 \text{ dollars} = 75 \text{ dollars} \]

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

The correct answer is a. $75.