Answer:
Let's assume the original price of the stock was x.
When the company announced it overestimated demand, the stock price fell by 40%.
So, the new price of the stock after the first decline was:
x - 0.4x = 0.6x
A few weeks later, when the seats were recalled, the stock price fell again by 60% from the new lower price of 0.6x.
So, the new price of the stock after the second decline was:
0.6x - 0.6(0.6x) = 0.24x
Given that the current stock price is $2.40, we can set up the equation:
0.24x = 2.40
Solving for x, we get:
x = 10
Therefore, the stock was originally selling for $10.