In a recent stock market downturn, the value of a $1,000 stock decreases at 1.6% in a month. This can be modeled by the function A(t)=1,000(0.984)12t , where A(t) is the final amount, and t is the time in years. Assuming the trend continues, what would be the equivalent annual devaluation rate of this stock (rounded to the nearest tenth of a percent) and what would it be worth (rounded to the nearest cent) after one year?
- fcas80Lv 72 months ago
A(1) = 1000* (0.984)^(12) = 824.03. 1 - 824.03/1000 = .176, or 17.6% per year.