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Lina20 [59]
3 years ago
3

You own 50 shares in a major corporation stock valued at $128 per share. This stock gained 12% in value last year. Assuming the

stock will continue to grow at the same rate over the next 5 years, calculate the value of the stock per share in the 5th year.
Business
1 answer:
motikmotik3 years ago
0 0

Answer:

  • <u><em>$225.58</em></u>

<u><em></em></u>

Explanation:

The growth of this <em>stock</em> is an example of annual compounded interest: the value will increase at the same rate over the next 5 years, thus every year its value will be multiplied by 1 + 0.12 = 1.12.

Thus, at the end of the year 5, the share will have multiplied its value (1.12)⁵ times:

         Value=\$128\times 1.12^5\approx\$128\times 1.76234=\$225.58

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