## You deposit \$1500 in a stock account. The account starts losing 2.6% interest annually. How must money do you have after 2 years when the ma

Question

You deposit \$1500 in a stock account. The account starts losing 2.6% interest annually. How must money do you have after 2 years when the market starts increasing again?
*Need the equation and solution PLEASE*

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3 weeks 2021-09-25T22:41:12+00:00 2 Answers 0

Step-by-step explanation:

Hi, to answer this question we have to apply the next formula:

A = P (1 – r) t

Where:

A = Future value of investment

P = Principal Amount

r = Annual Nominal Interest Rate decrease (decimal form)

t= years

Replacing with the values given

A = 1500 ( 1- 2.6/100)^2

A = 1500 ( 1-0.026)^2

A= 1500 ( 0.974)^2

A = \$1,423.014

Feel free to ask for more if needed or if you did not understand something.

2. Answer: M(2) = \$1500*(1 – 0.026)^2 = \$1423.01

Step-by-step explanation:

Initially in the acount there is \$1500

You lose a 2.6% (or 0.026 in decimal form) per year, so after the first year you have:

M = \$1500 – 0.026*\$1500 = \$1461

After other year, you lose oter 2.6%

M = \$1461 – 0.026*\$1461 = \$1423.01

The equation can be writen as:

M(t) = \$1500*(1 – 0.026)^t

Where t is the number of years, you can use t = 2 and get:

M(2) = \$1500*(1 – 0.026)^2 = \$1423.01