Let's solve the given problem step by step:
### Part A
To find both the pretax profit and the pretax return on investment (ROI) for Dylan's investment, we will use the following information:
- Dividends paid this year: \[tex]$5
- Capital gains (excluding dividends) from investment: \$[/tex]25
- Cost of investment: \[tex]$125
#### Step 1: Calculate Dylan's pretax profit from his investment
To find the pretax profit, we simply add the dividends paid and the capital gains.
\[
\text{Pretax Profit} = \text{Dividends Paid} + \text{Capital Gains}
\]
Given:
- Dividends Paid = \$[/tex]5
- Capital Gains = \[tex]$25
\[
\text{Pretax Profit} = 5 + 25 = \$[/tex]30
\]
So, Dylan's pretax profit from his investment is \[tex]$30.
#### Step 2: Calculate the pretax return on investment (ROI)
The ROI is calculated using the formula:
\[
\text{ROI (\%)} = \left( \frac{\text{Pretax Profit}}{\text{Cost of Investment}} \right) \times 100
\]
Given:
- Pretax Profit = \$[/tex]30
- Cost of Investment = \[tex]$125
\[
\text{ROI (\%)} = \left( \frac{30}{125} \right) \times 100 = 0.24 \times 100 = 24\%
\]
So, Dylan's pretax return on investment (ROI) is 24%.
### Summary for Part A
- Dylan's pretax profit from his investment is \$[/tex]30.
- Dylan's pretax return on investment (ROI) is 24%.
Let's fill the required answers in the boxes:
- Dylan's pretax profit from his investment is \$30.
- Dylan's pretax return on investment (ROI) is 24%.
