Question

What is the difference between the value of your stocks at the end of the second year and your initial investment?

Answer 1

Given:

$\begin{gathered} Investment=3,150.00 \\ First-year=loss-5\% \\ Second-year=gain-9\% \end{gathered}$

To Determine: The value of the stocks in the second year compared to the initial investment

Solution

$\begin{gathered} First-year=5\%-loss \\ End-of-first-year=(100-5)\%\times3150 \\ =95\%\times3150 \\ =2992.50 \end{gathered}$$\begin{gathered} Second-year=9\%-gain \\ End-of-second-year=(100+9)\%\times2992.50 \\ =109\%\times2992.50 \\ =1.09\times2992.50 \\ =3261.83 \end{gathered}$

Therefore, the difference between the value of your stocks at the end of the second year and the initial investment is

$\begin{gathered} Difference=3261.83-3150 \\ =111.83 \end{gathered}$

Hence, the difference is $111.83