# How To Calculate Weighted Average Price Of Your Purchased Shares?

`June 20, 2019 | Investopaper`

Depending upon the market sentiments, we buy a share of a certain company at different rates. For instance, when the Nepalese share market was on a bullish trend, higher share price of the companies were justified by everyday gain. On the other hand, during the bearish trend, the share price of the same company trading at a lower rate is not valued by the investor. One of the techniques to excel in your stock investments is to reduce the average price of your purchased shares.

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If you have performed a number of transactions while purchasing shares of a single company at a different rate, you need to know the average cost per share of that company. This is because it helps you to determine that at what price should your stock trade in order to break into the profit zone. Let me clarify this with an example.

Suppose you bought the shares of Deprosc Laghubitta at different rates when the market was signaling different sentiments. You bought 100 units of shares at Rs. 540. Similarly, the next 100 unit purchase cost you Rs. 500 per share and the last one cost was Rs. 450 per share for 50 unit shares. Now, if you want to know the weighted average price per share of the company, you can use the formula below.

In the above example, the weighted average price of DDBL is calculated as:

1st price*no. of shares = 540*100=54,000

2nd price*no. of shares= 500*100= 50,000

3rd price*no. of shares= 450*50= 22,500

Total number of shares = 250

Now, using the formula, the total weighted average price per share of Deprosc Laghubitta is Rs. 506. Hence, in order to gain profit in your total transaction of Deprosc Laghubitta, you have to sell your total shareholdings of the company above Rs. 506. Broker commission and other trading costs are not included in this example.

From this example, you must have noticed that buying shares of a company at a lower rate reduces the average price per share. This is one of the techniques to profit in the stock market. But this technique can also pile up your investment misery. So, we will further discuss more about this technique in our next article.

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### 7 thoughts on “How To Calculate Weighted Average Price Of Your Purchased Shares?”

• June 21, 2019 at 4:46 am

how can we adjust the price and know the profit zone of the share we purchased by adjusting the bonus share? for instance, i bought share of SBL @ 1280 when the market was hiped then latter i received bonus and right share how can i know the selling price per share right know so that i should ot bear loss??

• June 21, 2019 at 6:08 am

For bonus share, Adjusted Price Per Share= Total Investment/(Initial no. of shares + No. of bonus share)
For right share, Adjusted Price Per Share = (Total Investment+ Investment in right share)/(Initial No. of shares + No. of right share)

• August 27, 2020 at 7:32 am

Suppose if I buy different units of share in different price rate of a A company…( 36 and 100 units) but 36 units ma Malai profit bhayo mailey sell Garey but wacc calculate Huda ta 136 units Kai hudo rahexa Tara after some time aba 100 units ko Pani Malai profit bhayo ra mailey sell Garey Tara wacc ma mero share ma heryo bhaney 136 ko wacc calculate bhako dhekhaunxa Jaba ki mero 36 ta already sell bhaisakyoo ni…100 ko Po hunuparney hoina ra….aba mero bhako 100 units sell garda 136units*price ko capital gain tax tirnu parney ho ki 100 ko..

• June 10, 2021 at 10:07 am

क र ख कम्पनी मर्जरमा गए । क ‍‍‌‍ ख काे स्वाप रेशियाे १०० ८० थियाे । ख काे खरिद दर ५०० थियाे भने अहिले क काे मुल्य ८०० छ भने wacc calcuation कसरी गरिन्छ । पुजिगत लाभ कर कसरी लगाइन्छ । wacc गदा कैफियतमा कसरी लेख्नेहाेला ।
कृपया यस्काे जवाफ इमेल गरिदिनहाेला ।

• June 10, 2021 at 10:19 am

No capital gain tax for shares of merged companies. In order to do so, just put WACC higher than your selling price. In Remarks, Write ‘Merger’

• December 1, 2021 at 4:12 pm

Hello! Thanks for this explanation! It is very clear and helps me to track my performance on the stock I bought. I only have one question, how does the formula change when we SELL shares? Does it affect the average price?

So in your example, we have:
1) 100 shares for \$540
2) 100 shares for \$500
3) 50 shares for \$450

So if we SOLD 100 Shares for a price of 560, how do we include this in the equation?

• December 1, 2021 at 4:13 pm

Hello! Thanks for this explanation! It is very clear and helps me to track my performance on the stock I bought. I only have one question, how does the formula change when we SELL shares? Does it affect the average price?

So in your example, we have:
1) 100 shares for \$540
2) 100 shares for \$500
3) 50 shares for \$450

So if we SOLD 100 Shares for a price of 560, how do we include this in the equation?