Question

Problem 4-04 C PRICE SHARES Company ABC AB Day 1 $14 $20 510 350 Day 2 10 21 59510 350 Day 3 - 15 40 52 510 175a Day 4 1 13 41 510 175 Day 5 1041 26 510 175 aSplit at close of day 2. bSplit at close of day 3. 280 280 280 5606 560 Calculate a Dow Jones Industrial Average for days 1 through 5. Do not round intermediate calculations. Round your answers to three decimal places. Day 1: Day 2: Day 3: Day 4: Day 5:

Answer 1

	Price	Shares
	A	B	C	A	B	C
Day 1	14	20	53	510	350	280
Day 2	10	21	59	510	350	280
Day 3	15	40	52	510	175	280
Day 4	13	41	27	510	175	560
Day 5	10	41	26	510	175	560
Day 1 Average = [(Shares of A* A share price) + (Shares of B * B share price) + (Shares of C * C share price)] / [Total A, B and C shares]
	= [(510 shares * $14) + (350 shares * $20) + (280 shares * $53)] / [510 shares +350 shares + 280 shares]
	= [$7140 + $7000 +$14840] / 1140 shares
	= $25.421
Day 2 Average = [(Shares of A* A share price) + (Shares of B * B share price) + (Shares of C * C share price)] / [Total A, B and C shares]
	= [(510 shares * $10) + (350 shares * $21) + (280 shares * $59)] / [510 shares +350 shares + 280 shares]
	= [$5100 + $7350 +$16520] / 1140 shares
	= $25.412
Day 3 Average = [(Shares of A* A share price) + (Shares of B * B share price) + (Shares of C * C share price)] / [Total A, B and C shares]
	= [(510 shares * $15) + (175 shares * $40) + (280 shares * $52)] / [510 shares +175 shares + 280 shares]
	= [$7650 + $7000 +$14560] / 965 shares
	= $30.269
Day 4 Average = [(Shares of A* A share price) + (Shares of B * B share price) + (Shares of C * C share price)] / [Total A, B and C shares]
	= [(510 shares * $13) + (175 shares * $41) + (560 shares * $27)] / [510 shares +175 shares + 560 shares]
	= [$6630 + $7175 +$15120] / 1245 shares
	= $23.233
Day 5 Average = [(Shares of A* A share price) + (Shares of B * B share price) + (Shares of C * C share price)] / [Total A, B and C shares]
	= [(510 shares * $10) + (175 shares * $41) + (560 shares * $26)] / [510 shares +175 shares + 560 shares]
	= [$5100 + $7175 +$14560] / 1245 shares
	= $21.554
	Industrial Average
Day 1	$25.421
Day 2	$25.412
Day 3	$30.269
Day 4	$23.233
Day 5	$21.554