Diversifying Investment With Gold: Calculating Prema's Profit

What would Prema's profit have been if she sold everything in 2010?

Calculate the total profit Prema would have made if she sold all her gold holdings in 2010.

Prema's Profit Calculation:

To calculate Prema's profit, we need to determine the total revenue from selling her gold holdings in 2010 and then subtract her initial investment.

In 2005, Prema purchased 18 ounces of gold at $409 per ounce, resulting in an initial investment of $409 * 18 = $7,362.

In 2009, she sold one-third of her gold holdings, which is 18 ounces / 3 = 6 ounces, at $906 per ounce. The revenue from this sale would be $906 * 6 = $5,436.

Next, in 2010, Prema sold the remaining 12 ounces of gold at $1,267 per ounce. The revenue from this sale would be $1,267 * 12 = $15,204.

To calculate her total profit, we add up all the revenue from the sales: $5,436 + $15,204 = $20,640. Then we subtract her initial investment: $20,640 - $7,362 = $13,278. This is her profit from selling the gold in 2010.

However, the question asks for the profit if she sold everything in 2010. So, we need to consider the profit from the entire gold holding. She initially bought 18 ounces of gold, and since she sold all of it in 2010, the profit would be the total revenue from selling (which is $20,640) minus her initial investment of $7,362, resulting in a profit of $20,640 - $7,362 = $13,278.

Therefore, if Prema sold all her gold holdings in 2010, her profit would have been $13,278.