Question

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Answer 1

a) The compound interest equation is $C = 4250 \cdot 0.9675^{t}$.

b) There is an approximate loss of $ 987.16.

c) The stock will take approximately 12.979 to decrease by half.

How to find stock losses by compound interest model

Compound interest model represents the gain of a deposit as a function of the number of periods and initial amount. The model is represented below:

$C = C_{o}\cdot (1+r)^{t}$     (1)

Where:

• $C_{o}$ - Initial capital, in monetary units.
• $r$ - Interest rate.
• $t$ - Period number.
• $C$ - Current capital, in monetary units.

Capital decreases in time when interest rate is a negative number. The equation that models the situation is $C = 4250 \cdot 0.9675^{t}$ and the current capital after eight years is:

C = 4250 · 0.9675⁸

C = 3262.84

That represents an approximate loss of $ 987.16.

And the number of periods required to decrease the capital by half is:

$2125 = 4250 \cdot 0.9675^{t}$

$0.5 = 0.9675^{t}$

㏒ 0.5 = t · log 0.9675

t ≈ 20.979

The stock will take approximately 12.979 to decrease by half.

To learn more on compound interest: brainly.com/question/14295570

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