Under dollar-cost averaging, an investor will purchase $6,000 worth of stock each year for three years. The

Question:

Under dollar-cost averaging, an investor will purchase $6,000 worth of stock each year for three years. The stock price is $40 in year 1, $30 in year 2, and $48 in year 3.
a. Compute the average price per share.
b. Compute the average cost per share.
c. Explain why the average cost is less than the average price.