Question

Mira bought $500 of Freerange Wireless stock in January of 1998. The value of the stock is expected to

Answer 1

Answer:

2002

Step-by-step explanation:

The main topic of the question is compound interest.

If the percentage increase is 7.5%. Then the decimal multiplier would be 1.075. The 1 in front of the decimal represents the increase. 7.5 in decimal form is 0.075, so we just add the two together to get our decimal multiplier.

Now we do trial and error to see when we reach $700. After we get at least $700, we count how many times we multiplied $500 by the decimal multiplier and onwards to figure out the number of years it took and then add that to 1997. We add it to 1997 because the cost of the Freerange Wireless stock must have also been $500 at the end of 1997. The beginning of 1998 is the same as the end of 1997.

1) 500 x 1.075 = $537.50

2) 537.50 x 1.075 = $577.81

3) 577.81 x 1.075 = $621.15

4) 621.15 x 1.075 = $667.74

5) 667.74 x 1.075 = $717.8205

1997 + 5 = 2002

The value of Mira's stock will reach $700 by the end of 2002 because if we know that she used $500 at the beginning of 1998, that also means the cost of the Freerange Wireless stock was $500 at the end of 1997.

I hope this helps.