We want to calculate the rate of return, which is simply the difference between the net sale - the cost and divide it by the initial cost.
Let us calculate the initial cost. There are 20 shares, which were purchased a $20/share. So, If we multiply the cost per share by the total amount of shares, we would get the total cost, which is
[tex]20\cdot20=400[/tex]The final sale is 490. But to calculate the rate of return we should subtract the cost of the comission, which is $6. So, the net sale is
[tex]490\text{ - 6=484}[/tex]We can calculate the rate of return as
[tex]\frac{484\text{ - 400}}{400}=\frac{84}{400}=\frac{42}{200}=\frac{21}{100}=0.21[/tex]So the rate of return is 0.21, or 21%
