What is the total gain and annual return on JNJ stock if an investor bought it at $28.50 per share and sold it at $38 after two years?

To calculate the total gain and the annual return on the JNJ stock, it’s essential to start with determining the total gain from the investment. The total gain is computed by subtracting the purchase price from the selling price and then multiplying that by the number of shares.

Assuming the investor bought one share of JNJ stock at $28.50 and sold it for $38, the gain per share would be calculated as follows:

Selling Price - Purchase Price = Gain per Share
$38 - $28.50 = $9.50

If we consider an investment of one share, the total gain would simply be $9.50. To get to the figure presented in option C, we need to analyze how this increase translates over the investment period.

Next, the annual return can be calculated by determining the percentage increase in price and then annualizing that over the time holding the stock.

1. Calculate the total increase in value:

• $9.50 gain per share over a purchase price of $28.50 can be expressed as a percentage:
  Gain Percentage = (Gain / Purchase Price) x 100
  Gain Percentage = ($9.50 / $28.50) x 100 ≈