Question

# On January 1, 2015, an investor bought 200 shares of Al-Masry Steel at E£25 (Egyptian pound)...

On January 1, 2015, an investor bought 200 shares of Al-Masry Steel at E£25 (Egyptian pound) per share. On January 3, 2016, the investor sold the stock for E£30 per share. The stock paid quarterly dividend of E£2 per share. How much (in E£) did the investor earn on this investment and, assuming the investor will pay a tax of 25%, how much will she pay in income taxes on this transaction?

Purchase price of 200 shares of Al-Masry Steel = 200 x 25

= 5,000 Egyptian pounds

Sale price of 200 shares of Al-Masry Steel = 200 x 30

= 6,000 Egyptian pounds

Dividend received during the holding period = 200 x 2 x 4

= 1,600 Egyptian pounds

Earnings of investor = Sale price of 200 shares of Al-Masry Steel + Dividend received during the holding period - Purchase price of 200 shares of Al-Masry Steel

= 6,000 + 1,600 - 5,000

= 2,600 Egyptian pounds

Capital gain on sale of shares = 6,000 - 5,000

= 1,000 Egyptian pound

Tax payable = 1,000 x 25%

= 250 Egyptian pound