Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Two years ago, Izabella Martinez, from Atlanta, Georgia, invested $ 1 , 2 0 0 by buying 1 5 0 shares ( $ 8 per

Two years ago, Izabella Martinez, from Atlanta, Georgia, invested $1,200 by buying 150 shares ($8 per share NAV) in the Can't Lose Mutual Fund, an aggressive growth no-load mutual fund. Last year, she made two additional investments of $500 each (50 shares at $10 and 40 shares at $12.50). Izabella reinvested all of her dividends. So far, the NAV for her investment has risen from $8 per share to $13.50. Late in the year, she sold 80 shares at $13.50.
What were the proceeds from Izabella's sale of the 80 shares? Round your answer to the nearest dollar.
$
Investors can use the Internal Revenue Service's "average-cost basis method" to determine the average price paid for one share. Begin by calculating the average price paid for the shares. In this instance, the $2,200 is divided by 240 shares (150 shares +50 shares +40 shares). What was the average price paid by Izabella? Round your answer to the nearest cent.
$
To finally determine the average-cost basis of shares sold, you multiply the average price per share times the number of shares soldin this case, 80. What is the total cost basis for Izabella's 80 shares? Round your answer to the nearest dollar.
$
Assuming that Izabella has to pay income taxes on the difference between the sales price for the 80 shares and their cost, how much is this difference? Round your answer to the nearest dollar.
$

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Technical Analysis Of Stock Trends

Authors: Robert D. Edwards, John Magee, W.H.C. Bassetti

8th Edition

0814406807, 978-0814406809

More Books

Students also viewed these Finance questions