Question

Petra opens her mail one day to find that an anonymous donor has given her $3000 cash. (woohoo!) she sets aside $1000 to refurnish her apartment, and decides to invest the other $2000. unfortunately, the value of the stock swhe invested in started going down almost as soon as she invested her money. if the stock decreases at a rate of 15% per year for eight years, how much is the stock worth when she sells it eight years later?

Answer 1

The stock worth when she sells it eight years later $545, If the stock decreases at a rate of 15% per year for eight years.

According  to the question,

Petra opens her mail one day to find that an anonymous donor has given her $3000 cash. She sets aside $1000 to refurnish her apartment, and decides to invest the other $2000.

If the stock decreases at a rate of 15% per year for eight years. In order to find the stock worth when she sells it eight years later we have the formula

Value of stock after 'n' years = Principal[1-Rate/100]ⁿ

Value of stock after '8' years = 2000[1-15/100]⁸

= 2000[1-0.15]⁸

=2000[0.85]⁸

=2000[0.2725]

=545$

Hence, the stock worth when she sells it eight years later $545, If the stock decreases at a rate of 15% per year for eight years.

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