A) the equation that models the situation is 8000 x 0.9635 ^ Years = Value, B) the value of the stock today is $5515.78, so I lost $2484.22, and C) it will take more than 18 years for the stock to decrease by half.
Equations
Given that ten years ago, you invested most of the money you made during that summer into an Energy drink stock, and you purchased $8,000 dollars worth of stock and it was initially projected to continuously compound by 2%, but, however, the Energy drink stock consistently declined by 3.65% each year until the present, for a) Write an equation to model this situation, b) Estimate the value of the stock today and how much did you gain/lose, and c) Assuming the stock rate of decline remains the same, approximate the number of years it will take for the value of the stock to decrease by half, the following calculations must be made:
- A)
- 8000 x 0.9635 ^ Years = Value
- B)
- 8000 x 0.9635^10 = X
- 8000 x 0.6894 = X
- 5515.78 = X
- C)
- 8000 x 0.9635 ^ X = 4000
- 8000 x 0.9635^18.64 = 4000
Therefore, A) the equation that models the situation is 8000 x 0.9635 ^ Years = Value, B) the value of the stock today is $5515.78, so I lost $2484.22, and C) it will take more than 18 years for the stock to decrease by half.
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