Question

The stock for a given company has steadily increased from the beginning of 2006 to the end of 2007 by 5% per year,

however, in 2008 the stocked increased by 10%. If the stock was purchased at $12.43 at the beginning of 2006, then
what is the value of the stock at the end of 2008? Round your answer to the nearest cent.
$15.07
$13.70
b. $14.36
d. $13.67

ANSWER IS A.$15.07

Answer 1

To find the value of the stock at the end of 2008, we calculate the increase in the stock price each year and use the formula stock price = stock price * (1 + growth rate). The value of the stock at the end of 2008 is 14.36.

Step-by-step explanation:

To find the value of the stock at the end of 2008, we need to calculate the increase in the stock price each year. From 2006 to 2007, the stock increased by 5% per year, and in 2008 it increased by 10%.

First, we calculate the stock price at the end of 2007 using the formula: stock price at the end of 2007 = stock price at the beginning of 2007 * (1 + growth rate)

• Stock price at the end of 2007 = 12.43 * (1 + 0.05) = 13.0555

Next, we calculate the stock price at the end of 2008 using the formula: stock price at the end of 2008 = stock price at the end of 2007 * (1 + growth rate)

• Stock price at the end of 2008 = 13.0555 * (1 + 0.1) = 14.36105

Rounding to the nearest cent, the value of the stock at the end of 2008 is 14.36.