Question

The value of investments in the stock market change daily. Suppose you buy a stock for $3,789. It increases in value by 6% and then decreases 7% and then increases again by 7%. What is the new value? (round your answer to the nearest cent)

Answer 1

The final value of the stock is $3,996.66

Explanation:

Percentage Change

The x% of a number N is calculated as x*N/100. If there is an increase, that number is added to the original value, then the new value is:

N'=N+x*N/100

Operating:

N'=N(1+x/100)

That formula makes it easier to find the new values of increasing quantities. When the percentage is for decreasing, then the formula becomes:

N'=N(1-x/100)

The original value of the stock is N1=3,789. The first change is an increase of 6%, then the new value is:

N2=3,789(1+6/100)=3,789*1.06=$4,016.34

The stock value now decreases by 7%:

N3=4,016.34(1-7/100)=4,016.34*0.93=$3,735.20

Finally, the value increases again by 7%:

N4=3,735.20(1+7/100)=3,735.20*1.07=$3,996.66

The final value of the stock is $3,996.66