1. What is Average Purchase Price?

The average purchase price represents the mean cost per share you've paid for your stock holdings. It's calculated by dividing the total amount paid for shares by the total number of shares purchased.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( \text{Total Paid} \) — Total amount spent on shares (USD)
• \( \text{Shares Bought} \) — Total number of shares purchased

Explanation: This calculation helps investors understand their cost basis per share, which is essential for evaluating investment performance.

3. Importance of Average Purchase Price

Details: Knowing your average purchase price helps determine your break-even point, assess investment performance, and make informed decisions about when to sell.

4. Using the Calculator

Tips: Enter the total amount paid for shares in USD and the total number of shares purchased. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I include fees in the total paid?
A: Yes, for accurate cost basis calculation, include all commissions and fees paid to acquire the shares.

Q2: How does this differ from average cost basis?
A: They're essentially the same when calculating for a single purchase. For multiple purchases, you'd sum all amounts paid and all shares bought.

Q3: Why is average purchase price important?
A: It helps you determine your profit/loss when shares are sold and is needed for accurate tax reporting.

Q4: How should I handle stock splits?
A: After a split, adjust your total shares and divide your original cost basis across the new number of shares.

Q5: Does this work for fractional shares?
A: Yes, the calculator can handle fractional share amounts if your brokerage allows fractional share purchases.