Ask a New Question
Menu

Round any decimals to the nearest penny.

You invest $1050 buying stock in a company at $10 per share.
The shares increase in value by 13% the first year and decrease
by 5% the second year. How much is the total value of your stocks
in the second year. (remember to round the per-share price to the
nearest penny before completing any other computations)

1 answer

To calculate the total value of your stocks after two years, follow these steps:

  1. Determine the number of shares purchased: \[ \text{Number of shares} = \frac{1050}{10} = 105 \text{ shares} \]

  2. Calculate the price per share after the first year:

    • The price per share increases by 13%.
    • Calculate the new price: \[ \text{New price after 1 year} = 10 \times (1 + 0.13) = 10 \times 1.13 = 11.30 \text{ dollars} \]

  3. Calculate the value of the stocks after the first year: \[ \text{Value after 1 year} = 105 \times 11.30 = 1181.50 \text{ dollars} \]

  4. Calculate the price per share after the second year:

    • The price per share decreases by 5%.
    • Calculate the new price: \[ \text{New price after 2 years} = 11.30 \times (1 - 0.05) = 11.30 \times 0.95 = 10.735 \]
    • Round to the nearest penny: \[ \text{New price after 2 years} \approx 10.74 \text{ dollars} \]

  5. Calculate the value of the stocks after the second year: \[ \text{Value after 2 years} = 105 \times 10.74 = 1127.70 \text{ dollars} \]

Therefore, the total value of your stocks in the second year is $1127.70.