Question

You invest $5,175 in a stock plan. It increases 9% the first year then loses 5% of its value the second year. What is your gain compared to your original investment?

A. 183.71
B. 195.65
C. 201.14
D. 185.21

Answer 1

A. 183.71

Explanation:

Original investment in stock plan = $5175

Increase in the first year of investment in stock plan = 9% of $5175

= 0.09 ( $5175)

= $465.75

then new value of investment in stock plan = $5175 + $465.75 = $5640.75

Loss in the investment of stock plan = 5% of $5640.75

= 0.05 ( $5640.75)

= $282.0375

then new value of investment in stock plan = $5640.75 - $282.0375 = $5358.7125

Now let's find difference between latest value and the original value of investment

$5358.7125 - $5175 = $183.7125

Hence choice A. 183.71 is correct.