Question

The price of a company's share dropped by 3.50% by the end of the first year, down to $44.25. During the second year the price of the share dropped by $1.99. a. What was the price of the share at the beginning of the first year? Round to the nearest cent b. What was the price of the share at the end of the second year? Round to the nearest cent c. What was the percent change in the price of the share over the two years? % Express the answer with a positive sign for percent increase or negative sign for percent decrease

Answer 1

a. $45.86

b. $43.87

c. Percentage change = -4.40%)

Explanation:

a. Let the price of share at the beginning of first year be represented with X

Now, Price of company's share dropped by 3.50% at the end of first year.

So, Price of share at the end of first year = x - 3.5% of x

= x - 0.035x

= 1x - 0.035x

= 0.965x

But it is equal to $44.25

=> 0.965x = 44.25

x = 44.25 / 0.965

x = 45.8549223

x = $45.86

b. During second year price of share decreased by $1.99. Therefore, Price of share at the end of second year = $45.86 - $1.99 = $43.87

c. Percentage change in the price of shares over two years = {(45.86 - 43.87)/45.86} *100

= (1.99/45.86)*100

= 0.04339294 * 100

= 4.40%

Now, as price of shares has dropped, the percentage change will be negative. (Δ% = -4.40%)