Question

An investor has purchased 1,000 shares of stock at a price of $10 per share. The stock pays no dividends, and historically has a growth rate of 12.5% per year compounded continuously. Which function models this scenario?
A(t) = 1,000e12.5t
A(t) = 1,000e 0.125t
A(t) = 10,000e12.5t
A(t) = 10,000e 0.125t

Answer 1

Answer:

D

Step-by-step explanation:

Here, we want to select which of the options explains the scenario in the question.

Firstly, 1,000 shares were purchased at $10 per share.

Mathematically the total amount of shares bought will be 10 * 1000 = $10,000

Also, we have the growth rate as 12.5% = 12.5/100 = 0.125

Thus, representing the scenario with a function, we have;

A(t) = 10,000 e0.125t