Question

In 1999, the share price for General Motors stock was $144 per share but has been declining at an average rate of 14% per year. The equation P = 144(0.86)x will give the value of the stock after any number of years. What is the current share price for GM stock?

Answer 1

Answer: $5.22 (in the year 2021)

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Step-by-step explanation:

The year 2021 is 22 years after 1999 since

2021 - 1999 = 22

That means we'll plug x = 22 into the equation given to us

P = 144*(0.86)^x

P = 144*(0.86)^22

P = 5.21588994768589 which is approximate

P = 5.22 rounding to the nearest cent

The share price is about $5.22 in the year 2021.

This assumes that the 14% decline keeps happening year after year; however, in reality, stocks are more complicated and fluctuate more randomly if anything.