Question

On the last day of April 2009, the price of a share of stock in a major entertainment corporation was $5.36. Over the next 4 years, the annual growth rate was 4.15%. The growth in the price of this stock can be modeled by the function where P represents the price, in dollars, and t represents the number of years since the last day in April 2009. Which function can be used to represent the price of a share of stock in this entertainment corporation on the last day in June 2011?

Answer 1

Hence After 2 years from 2009 to 2011 THe price for share of stock will be 5.8141 $

Explanation:

Given:

Initial price=$5.36

Rate=4.15 %

To Find:

Function which represents the growth price for stock market?

Solution:

As the function is growing one and with same rate and depends upon the time period ,

So the exponential function as

`P=A(1+R)^t` will the required function ,

So P will be price of stock at t time period with R as rate for function.

A be the previous year price

From 2009 to 2013 rate is 4.15 %

we have to find price after 2 years

So t=2 , A at 2009 =5.36$

So P at 2011 will be given by,

`P=A(1+R)^t`

`P=5.36(1+0.0415)^2`

`P=5.36(1.0415)^2`

`P=5.8141 $`