# what was the value of the shares at the end of 2007?

• August 9th 2011, 05:59 AM
university
what was the value of the shares at the end of 2007?
a man invests 40,000 in ACME shares at the beginning of 2005.the stocks rose in value by 12% per annum for each of the next 3 years and then started to decrease by 16% per annum.
1)what was the value of the shares at the end of 2007?
2)if the value of the shares continues to decrease at 16% per annum,when will they have dropped to their original 2005 price?
• August 9th 2011, 06:25 AM
e^(i*pi)
Re: what was the value of the shares at the end of 2007?
For 1 it's easiest to solve by brute force. The value after three years is given by $40000 \cdot 1.12^3$

The value after n years is $40000 \cdot 1.12^3 \cdot 0.84^n$