Question

You purchased a stock for $150 per share. The value of the stock has increased by 25% per year. Which function represents the value of one stock t years after is was purchased?

Answer 1

Answer:

$S(t) = 150(1.25)^{t}$

Step-by-step explanation:

I purchased a stock for $150 per share. The value of the stock has increased by 25% per year.

Therefore, the value of the stock is compounded each year at a rate of 25%.

Now, using the formula of compound interest, after t years the value of the stock will be given by

$S(t) = 150(1 + \frac{25}{100})^{t} = 150(1.25)^{t}$ (Answer)