Exhibit 4.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 56

Multiple Choice

Exhibit 4.7
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The maintenance margin is 30%.
-Refer to Exhibit 4.7.At the end of one year shares of RossCorp stock are selling for $55 per share and the company paid dividends of $0.85 per share.Assuming that you paid the full cost of the purchase,what is your rate of return if you sell RossCorp stock?

• A) 18.08%
• B) 23.51%
• C) 22.32%
• D) 14.96%
• E) 19.28%

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Definitions:

Net Sales

The final sales figure a company reports, after deducting returns, discounts, and compensations for damaged or missing products from its total sales.

Gross Sales

The total sales revenue of a company without deducting any sales returns, allowances, or discounts.

Sales Returns and Allowances

Transactions where customers return goods or receive discounts due to issues, reducing total sales revenue.

Contra-Revenue Accounts

Accounts that are used to record reductions in gross revenue, such as sales returns and allowances, and discounts.