Question

Two years ago, Paul bought $350 worth of stock in a cell phone company. Since then the value of his stock has been increasing at an average rate of 9 3/4 % per year. How much is the stock worth now?

Answer 1

The net worth of the stock of Paul is $421.6 approximately.

Solution:

Given, two years ago, Paul bought $350 worth of stock in a cell phone company.

Since then the value of his stock has been increasing at an average rate of
`9(3)/(4)` % per year.

We have to find how much is the stock worth now?

Now, stock worth after 1 year is given as:

`\begin{array}{l}{=350+9 (3)/(4) \% \text { of } 350} \\\\ {=350+(9 * 4+3)/(4) \% * 350} \\\\ {=350+(39)/(4) \% * 350} \\\\ {=350+(39)/(4) \% * 350} \\\\ {=350+(39)/(100) * 350} \\\\ {=350+(39)/(400) * 350} \\\\ {=350\left(1+(39)/(400)\right)=350 * 1.0975=\$ 384.125}\end{array}`

So, now, stock worth after 2 years is given as:

`\begin{array}{l}{=384.125+9 (3)/(4) \% \text { of } 384.125} \\\\ {=384.125\left(1+9 (3)/(4) \%\right)} \\\\ {=384.125\left(1+(39)/(100)\right)}\end{array}`

`=384.125 * 1.0975=\$ 421.577187`

Hence, the net worth of the stock is $421.6 approximately.