The depreciated amount of a declining stock is $8,550.70. What was the purchase price before it declined at 7.53% after two years? A. $10,000 B. $11,000 C. $12,000 D. $13,000

Question

The depreciated amount of a declining stock is $8,550.70. What was the purchase price before it declined at 7.53% after two years?         A.	$10,000 	B.	$11,000 	C.	$12,000 	D.	$13,000

anonymous · Answer

The answer is A.

Explanation: The price declined .0753 in the first year so at the end of the first year there was 1 - .0753 of the price left. This amount then declined .0753 in the second year. At the end of the second year there was (1-.0753) of (1-.0753) of the original price left. (1-.0753)^2 times 10,000 should be 8,550.70.