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You invest $1,050.00, buying stock in a company at $10.00/share. The shares increase in value by 13% the first year and decrease by 5% the second year. How much is the total value of your stocks in the second year? (Remember to round the per-share price to the nearest penny before completing any other computations.)

2 Answers

4 votes
Number of shares
1050/10=105
After one year share value
10×(1+0.13)=11.3
After the second year share value
11.3×(1−0.05)=10.735
Total
10.735×105=1,127.175
User Vikbehal
by
8.3k points
3 votes

Answer:


1127.70\\$

Explanation:

The current price of a unit share is
10\\$ and the total amount invested is
1050\\$

Total number of shares purchased


= (1050)/(10)\\ = 105

In the first year, the share increased by 13%, thus the value of a unit share after first year is


10$
+ (13% of
10\\$)


= 10 + (13)/(100) * 10\\= 10 + 1.3\\= 11.3\\$

In the second year, the share decreased by 5%, thus the value of a unit share after second year is


11.3$
-(5% of
11.3\\$)


= 11.3 - (5)/(100) * 11.3\\= 10.735\\


10.74\\$

Thus the total value of shares after 2 years is


105 * 10.74\\= 1127.70\\$

User Martin Preusse
by
8.2k points

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