Question

I need help for these two problems and if I can get the steps thank you.

1.solve for x: 0.34=1/(1+x)carrot3

2.If you buy a share of stock for $15 and sell it 2 years later for $18.50, what is the annual percentage return (on a compound basis) that you received for your investment?

and thank you for your help.

Answer 1

first, it's "caret" not "carrot"

since 3 = 1/3.333, I'll just use 3 for 1/3.4:

0.34 = 1/(1+x)^3
(1+x)^3 = 1/.34 = 3
1+x = ∛3
x = ∛3 - 1

For interest rate, just use the good old formula

A = P(1+r/n)^(nt)
18.50 = 15(1+r)^2
r = .11 = 11%