You are given the following information concerning two stocks that make up an index.

Assume that you want to reindex with the index value at the beginning of the year equal to 100. What is the index level at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price per Share

Shares Outstanding Beginning of Year End of
Year
Kirk, Inc. 40,000 $ 38 $ 42
Picard Co. 28,500 73 81

Question

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Respuesta :

Dryomys Dryomys · Answer 1 · 2020-03-26T07:58:40+01:00

Answer:

111

Explanation:

Given that,

Beginning index value = 100

Beginning value:

= Kirk, Inc. + Picard Co.

= (No. of shares outstanding × Price per share)

= (40,000 × $38) + (28,500 × $73)

= $1,520,000 + $2,080,500

= $3,600,500

Ending value:

= Kirk, Inc. + Picard Co.

= (No. of shares outstanding × Price per share)

= (40,000 × $42) + (28,500 × $81)

= $1,680,000 + $2,308,500

= $3,988,500

Index level at the end of the year:

= (Ending value ÷ Beginning value) × Beginning index value

= ($3,988,500 ÷ $3,600,500) × 100

= 1.11 × 100

= 111