Percent Increase with Capital Gains

​Block Day's quiz had a problem, "If you increase 50 by 30% the answer is... 65.

The amount of increase is 15 (30% x 50) but the answer is 65.

2 ways to see it:

50 + .3 x 50 = 50 + 15 = 65

50(1.3) = 65

Check it on your calculator

​When we look at the selling price of a stock, it is the total value of the sell.

shares x purchase price

When we are looking at Capital gain we are looking at the difference of selling price and purchase price.

Selling price - purchase price = gross capital gain

A gross capital loss occurs when your value is negative.

​When we look at percent of change we look at capital gain divided by original purchase price.

Selling price - purchase price = percent of change

purchase price

We get a decimal number then multiply by 100 to change it to a percent value.

​pg. 39 #13

​Zeke bought g shares of stock for w dollars per share.

a) Total purchase price? gx

His broker called him and told him to sell the shares when they earn a 40% capital gain.

b) Express the capital gain algebraically. Since the selling price was 40% more than the purchase price it would be 40% x gx = 0.4gx

c) Zeke decides to sell his shares. Express the total selling price of all the shares algebraically. It has been raised by 40% so the purchase price + increased value become gx + 0.4gx = 1.4gx

​ANOTHER EXAMPLE

​You by 100 shares for $30 each. Purchase price?

100 x $30 = $3000

The value raises by 140%

$30 x 140% = $30 x 1.4 = $42

If the value was raised by $42 then what is the value of each share now?

$30 + $42 = $72 (x + 1.4x = 2.4x) 30 x 2.4 = 72

100 x 72 = 7200

Selling price is $7200 minus Purchase Price which was $3000 which equals $4200. $4200/$3000 = 1.4, 1.4 x 100 = 140%

​I hope this gives you a head start into #14 which is a tough one.

Open Ended

e) Did the investment end up as a capital gain or loss? Explain.