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The stock was worth $85. What will the stock be worth in 7 years? WhThe value of πPhone stock has increased 8% each year for the past several years. In 2020,at was the stock worth in 2016? Equation: 7 years from now? In 2016?

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Answer:

Part A

The worth of the stock in 7 years is approximately $145.68

Part B

The worth of the stock in 2016 is approximately $62.48

Part C

f(7) = 85 × (1 + 0.08)⁷

Part D

85 × (1 + 0.08)⁻⁴

Explanation:

Question

"The value of the πPhone πhas increased 8% each year for the past several years. In 2020, the stock was worth $85. What will the stock be worth in 7 years? What was the stock worth in 2016? Equation: 7 years from now? in 2016?"

The equation for the growth of the stock to a final amount f(x) is given by the general equation for exponential growth as follows;


f(t) = a \cdot (1 + r)^t

Where, in relation to the stocks;

f(t) = The value of the stocks after 't' years

a = The initial amount of the stocks

r = The rate of growth of the stock = 8%

t = The number of years of growth

Part A

The worth of the stock in 7 years, f(7), is found as follows;

The (initial) value of the stock in 2020, a = $85

The rate of increase in the value of the stock = The growth rate of the stock, r = 8% = 8/100 = 0.08

The number of years of growth, t = 7 years

We get;

f(7) = 85 × (1 + 0.08)⁷ ≈ 145.68

The worth of the stock in 7 years, f(7) ≈ $145.68

Part B

The value of the stock in 2016 is found as follows;

The number of years between 2020 and 2016 = 2016 - 2020 = -4 (years)

Here, let 'f(t)' represent the value of the stock in 2016, and therefore, we have;

t = -4 years

r = 8% = 0.08

a = The value of the stock in 2020 = $85

Plugging in the values gives;

f(-4) = 85·(1 + 0.08)⁻⁴ = 85 × (1.08)⁻⁴ ≈ 62.48

The value of the stock in 2016, f(-4) ≈ $62.48.

Part C

The equation for 7 years from now is f(7) = 85 × (1 + 0.08)⁷

Part D

The equation for 2016 is f(-4) = 85 × (1 + 0.08)⁻⁴.

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