Calculating Upside Potential

Question

I have a story problem in my finance class. I can't figure out how to determine if my math is correct or not. The problem is:

You purchase stock for 0.015 (one and a half cent) per share. You purchased 7,500 shares. Several decades later you sell the stock for $1.00 per share. How much money do you have?

I keep coming up with $746,250.00 and $7,462,500.00. I'm not sure which, if either is correct. It seems like there should be a formula for this kind of thing. However, I can't seem to find it. Am I going about this correctly?

THank you!

Check your arithmetic. How can you have more that $ 7500? – Jay Mar 11 '14 at 14:42 — Jay, Mar 11 '14 at 14:42

score 0 · Accepted Answer · edited Mar 11 '14 at 14:32

0

Cost of purchase = Price per share $\times$ Number of shares $= \$0.015 \times 7500 = \$112.5$

Earning from selling = Price per share $\times$ Number of shares $= \$1 \times 7500 = \$7500.$

Net profit $= \$7500 - \$112.5 = \$7487.5$

edited Mar 11 '14 at 14:32

Henry

157,058

answered Mar 11 '14 at 14:19

Guy

8,857
1
28
57

$7500-112.50$ is $7387.50$, not $7487.50$ – MPW Mar 11 '14 at 14:41

Calculating Upside Potential

1 Answers1