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

Answers ( )

    0
    2021-09-25T22:42:17+00:00

    Answer: $1,423.014

    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.

    0
    2021-09-25T22:43:10+00:00

    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

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