You invest $3,150 in a stock plan. The first year, it loses 5% of it's value.

Question

The second year, it gains 9% of it's value. What is the difference
between the value of your stocks at the end of the second year
and your initial investment? Round to the nearest penny

Answer 1

To calculate the difference between the value of your stocks at the end of the second year and your initial investment, we’ll go through the calculations step-by-step.

1. Initial Investment: $3,150

2. Value After Year 1 (loses 5%): \[ \text{Loss} = 0.05 \times 3150 = 157.50 \] \[ \text{Value After Year 1} = 3150 - 157.50 = 2992.50 \]

3. Value After Year 2 (gains 9%): \[ \text{Gain} = 0.09 \times 2992.50 = 269.325 \] \[ \text{Value After Year 2} = 2992.50 + 269.325 = 3261.825 \]

4. Difference Between Final Value and Initial Investment: \[ \text{Difference} = 3261.825 - 3150 = 111.825 \]

5. Round to the Nearest Penny: \[ \text{Rounded Difference} = 111.83 \]

Therefore, the difference between the value of your stocks at the end of the second year and your initial investment is $111.83.