In a recent stock market downturn, the value of a $5,000 stock is decreasing at 2.3% per month. This situation can be modeled by the equation A(t) = 5,000(0.977)12t, where A(t) is the final amount and t is time in years. Assuming the trend continues, what is the equivalent annual devaluation rate of this stock (rounded to the nearest tenth of a percent) and what is it worth (rounded to the nearest ten dollars) after 1 year?

A. 24.4% and $3,780.00
B. 75.6% and $3,780.00
C. 27.6% and $1,380.00
D. 72.4% and $3,620.00

Question

In a recent stock market downturn, the value of a $5,000 stock is decreasing at 2.3% per month. This situation can be modeled by the equation A(t) = 5,000(0.977)12t, where A(t) is the final amount and t is time in years. Assuming the trend continues, what is the equivalent annual devaluation rate of this stock (rounded to the nearest tenth of a percent) and what is it worth (rounded to the nearest ten dollars) after 1 year?

 A. 24.4% and $3,780.00
 B. 75.6% and $3,780.00
 C. 27.6% and $1,380.00
 D. 72.4% and $3,620.00

jskinny0831 · Answer

@DanJS

jskinny0831 · Answer

someone said it was A but thats wrong so i think its B @DanJS

anonymous · Answer

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jskinny0831 · Answer

yeah

jskinny0831 · Answer

do you know the answer? @TonyPham

anonymous · Answer

All you need to to is to plug in the value of t=1 year to find the value of the stock at the end of 1 year.  You take the final value divide the initial value ($5,000) you will see how many percent of the stock value you have left.

jskinny0831 · Answer

so whats the answer @TonyPham I'm timed so i need the answer fast sorry

jskinny0831 · Answer

i got 3781 but theres 2 answers with that @TonyPham

jskinny0831 · Answer

can you please help me @DanJS

anonymous · Answer

3781/5000 = 0.7561.  This means after a year you have 75.6% of the investment left.  
So, the question is how many percents did you loose: 100% -75.6% = ....  This is the annual depreciation rate.