Question

You bought 200 shares of Honda stock at $300 per share. You think it is a good idea to sell your stock once its market price is quadrupled. If the stock price increases 30% every year, how long will you have to wait before you sell your stock

Answer 1

You will have to wait 6 years before you sell the stock.

Step-by-step explanation:

a) Data and Calculations:

Honda stock bought = 200

Price per share = $300

Annual increase in price = 30%

Future value factor at 30% for 6 years = 4.827

Future value of the stock after 6 years = $14,481 ($300 * 4.827)

By this time, the value of the stock has quadrupled or become more than four times its value when it was initially purchased, if it continues to increase by 30% year-on-year.