Question

Pharoah company's investments in equity securities at December 31 show a total cost of 202,900 and a total fair value of214,500. What is the percentage increase or decrease in the value of the investments?

1) Less than 5%
2) Between 5% and 10%
3) Between 10% and 15%
4) More than 15%

Answer 1

To calculate the percentage increase in investment value, subtract the total cost from the total fair value, divide by the total cost, and multiply by 100. The increase for Pharoah company's investments is approximately 5.72%, which falls between 5% and 10%.

Step-by-step explanation:

The question involves calculating the percentage increase in the value of investments. To find the percentage increase, you subtract the original value (total cost) from the new value (total fair value) and then divide by the original value (total cost). Finally, multiply the result by 100 to get a percentage.

So the formula you would use is: ((Fair Value - Cost) / Cost) x 100 = Percentage Increase

Using the provided numbers: ((214,500 - 202,900) / 202,900) x 100 = (11,600 / 202,900) x 100 ≈ 5.72%

This means that the percentage increase in the value of the investments falls between 5% and 10%.