Question

Suppose you invested $500 in K-Mart stock in October

of 2001. Each month the stock lost 2% of its value.
How much was the stock worth in October of 2002?
(HINT: The loss is per MONTH.)

Answer 1

$380

Explanation:

Amount invested in October 2001 = $500

If 2% is lost on stock each month, amount lost every month will be 2% of $500

= 2/100×$500

= $10

In order to know how much the stock will cost by October 2002, we need to know the number of month there is between October 2001 and October 2002.

The number of months within this period is 12months

If $10 is lost per month, the total stock lost for 12months will be

$10×12 = $120

Stock worth by October 2002 = Money invested - Total stock loss

Stock worth by October 2002 = $500-$120

= $380