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Math Help - what was the value of the shares at the end of 2007?

  1. #1
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    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?
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  2. #2
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    e^(i*pi)'s Avatar
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    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
    Last edited by e^(i*pi); August 9th 2011 at 11:32 AM. Reason: 1.12 not 1.2
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