Share purchase cost and subsequent gain on sale at premium 12,500 shares of par value $20 each are purchased at $25 per share. Later, they are sold at a premium of $11 per share (i.e., at $31). What is the purchase amount, and what is the seller’s gain?

Introduction / Context:This question combines computing the initial outlay with a later sale at a higher price (premium). The gain is simply the difference between sale proceeds and purchase cost for the full quantity of shares.

Given Data / Assumptions:

• No. of shares = 12,500
• Buy price = $25 per share
• Sell price = $31 per share (premium of $11 over par $20)

Concept / Approach:Purchase amount = shares * buy price. Sale proceeds = shares * sell price. Gain = proceeds − purchase amount. (No brokerage mentioned.)

Step-by-Step Solution:Purchase amount = 12,500 * $25 = $312,500Sale proceeds = 12,500 * $31 = $387,500Gain = 387,500 − 312,500 = $75,000

Verification / Alternative check:Per-share gain = $31 − $25 = $6. For 12,500 shares: 12,500 * $6 = $75,000, confirming.

Why Other Options Are Wrong:Other pairs do not match both the correct purchase total and correct gain simultaneously.

Common Pitfalls:Using par value $20 as the buy price; the buy was at $25.

Final Answer:$ 312,500 purchase; $ 75,000 gain