The idea, step by step
Account for each cash flow
A share represents a unit of ownership. In a mathematical transaction model, purchase cost equals number of shares times purchase price plus brokerage. Net sale proceeds subtract the sale brokerage. A dividend quoted per share is multiplied by the number held.
A price gain is not the same as total profit. Include purchase costs, sale costs and dividend cash flows that the question states. Do not assume a dividend repeats or a future selling price is guaranteed.
Interpret share measures
Dividend yield compares a specified annual dividend per share with a stated share price. It excludes a capital price change and usually excludes brokerage unless a model explicitly changes the denominator.
Buying more shares increases the absolute exposure to both gains and losses. Our calculations use hypothetical prices; the percentage result describes the scenario, not a promise of future performance.
A common trap
Profit equals the selling price minus the buying price.
Instead: That is only the price change per share. Total profit also uses quantity, transaction costs and dividends.
See the thinking
Worked example
Buy 200 shares at AUD 8.40 each with AUD 20 brokerage. Later sell all at AUD 9.10 with AUD 20 brokerage and receive AUD 0.24 dividend per share. Find net profit.
- Purchase cost=200×8.40+20=1700.
- Sale proceeds=200×9.10−20=1800.
- Dividend=200×0.24=48;profit=1800+48−1700=148.
Worked example
A share costs AUD 12 and pays an annual dividend of AUD 0.54. Find dividend yield.
- Yield=0.54/12×100%.
- 0.045=4.5%;no price gain is included.
Check your understanding
Brokerage is AUD 15 on a purchase of 100 shares at AUD 6. What is total cost?
Show answer
AUD 615.00
100×6+15=615.
Your turn
6 questions · 12 marks · Work at your own pace.
Read the questions online
- Buy 80 shares at AUD 15.50 with AUD 18 brokerage. Find the cost.2 marks
- Sell 150 shares at AUD 7.20 with AUD 22 brokerage. Find net proceeds.2 marks
- Receive AUD 0.36 dividend on each of 250 shares. Find total income.2 marks
- Purchase cost was AUD 2040. Net sale proceeds are AUD 2160 and dividends AUD 65. Find profit.2 marks
- At AUD 18 per share, annual dividend is AUD 0.72. Find dividend yield.2 marks
- Buy 100 shares at AUD 10 with AUD 15 brokerage each way. With no dividend, what sale price per share breaks even?2 marks
Read the worked solutions
Equivalent correct methods earn the corresponding marks. Include units where asked.
- Buy 80 shares at AUD 15.50 with AUD 18 brokerage. Find the cost.2 marks
80×15.50+18=1258.
AUD 1,258.00 - Sell 150 shares at AUD 7.20 with AUD 22 brokerage. Find net proceeds.2 marks
150×7.20−22=1058.
AUD 1,058.00 - Receive AUD 0.36 dividend on each of 250 shares. Find total income.2 marks
250×0.36=90.
AUD 90.00 - Purchase cost was AUD 2040. Net sale proceeds are AUD 2160 and dividends AUD 65. Find profit.2 marks
2160+65−2040=185.
AUD 185.00 - At AUD 18 per share, annual dividend is AUD 0.72. Find dividend yield.2 marks
0.72/18×100=4%.
4% - Buy 100 shares at AUD 10 with AUD 15 brokerage each way. With no dividend, what sale price per share breaks even?2 marks
Cost=1015.
100 s−15=1015,so 100 s=1030.
AUD 10.30 per share
Curriculum reference & lesson scope
SACE Board of South Australia
Stage 1 General Mathematics: investing and borrowing. Supplied educational models cover interest, investment comparisons, shares and credit; they are not recommendations of real products or statements of personal tax liability.
Official curriculum source ↗