Question

Two years ago, Paul bought $350 worth of stock in a cell phone company. Since then the value of his stock has been increasing at an average rate of 9 3/4 % per year. How much is the stock worth now?

Answer 1

The net worth of the stock of Paul is $421.6 approximately.

Solution:

Given, two years ago, Paul bought $350 worth of stock in a cell phone company.  

Since then the value of his stock has been increasing at an average rate of $9\frac{3}{4}$ % per year.  

We have to find how much is the stock worth now?

Now, stock worth after 1 year is given as:

$\begin{array}{l}{=350+9 \frac{3}{4} \% \text { of } 350} \\\\ {=350+\frac{9 \times 4+3}{4} \% \times 350} \\\\ {=350+\frac{39}{4} \% \times 350} \\\\ {=350+\frac{39}{4} \% \times 350} \\\\ {=350+\frac{39}{100} \times 350} \\\\ {=350+\frac{39}{400} \times 350} \\\\ {=350\left(1+\frac{39}{400}\right)=350 \times 1.0975=\ 384.125}\end{array}$

So, now, stock worth after 2 years is given as:

$\begin{array}{l}{=384.125+9 \frac{3}{4} \% \text { of } 384.125} \\\\ {=384.125\left(1+9 \frac{3}{4} \%\right)} \\\\ {=384.125\left(1+\frac{39}{100}\right)}\end{array}$

$=384.125 \times 1.0975=\ 421.577187$

Hence, the net worth of the stock is $421.6 approximately.