Question

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.)

Answer 1

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

Answer 2

`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\\`$