The formula to calculate the average purchase price per share is:
\[ APP = \frac{TIC}{TN} \]
Where:
Dollar-cost averaging (DCA) is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset in an effort to reduce the impact of volatility on the overall purchase. The purchases occur regardless of the asset’s price and at regular intervals. In effect, this strategy removes much of the detailed work of attempting to time the market in order to make purchases of equities at the best prices.
Let's assume the following values:
Step 1: Divide the total investment cost by the total number of shares purchased:
\[ APP = \frac{10000}{250} = 40 \]
The Average Purchase Price (APP) is $40 per share.
