Question

Three years ago, Jolene bought $500 worth of stock in a software company. Since then the value of her purchase has been increasing at an average rate of 12 1 2 % per year. How much is the stock worth now? (Round each money calculation you make to the nearest cent.)

Answer 1

The stock is worth $702.5.

Explanation:

Giving the following information:

Present Value= $500

Number of periods (n)= 3 years

Growth rate (i)= 12%

To calculate the value of the stock today, we need to use the following formula:

FV= PV*(1+i)^n

FV= 500*(1.12^3)

FV= $702.5

The stock is worth $702.5.