Question

you purchase a stock for $25 and expect its price to grow annually at a rate of 6 percent. use appendix a to answer the questions. round your answers to the nearest cent.

Answer 1

The question relates to the calculation of future stock value using the compound interest formula, considering an annual growth rate of 6 percent from an initial investment of $25.

Step-by-step explanation:

This question explores the concept of compound interest and how it can significantly increase the value of an investment over time. Using the provided example, purchasing a stock at $25 and expecting it to grow annually at a rate of 6 percent, we can calculate the future value of the investment using the compound interest formula: FV = P(1 + r)ⁿ, where FV is the future value, P is the principal amount ($25), r is the annual growth rate (6%), and n is the number of years for which the money is invested.

Compound Interest Calculation Example

Assuming you decide to keep this stock for 10 years, the calculation would be:

• $25(1 + 0.06)¹⁰

After simplifying, you would find the future value of your investment, and don't forget to round your answer to the nearest cent.