Question 1117802: Suppose that you have $14,000 in a rather risky investment recommended by your financial advisor. During the first year, your investment decreases by 60% of its original value. During the second year, your investment increases by 70% of its first-year value. Your advisor tells you that there must have been a 10% overall increase of your original $14 comma 000 investment. Is your financial advisor using percentages properly? If not, what is your actual percent gain or loss of your original $14 comma 000 investment?
Found 2 solutions by stanbon, ikleyn:
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Suppose that you have $14,000 in a rather risky investment recommended by your financial advisor. During the first year, your investment decreases by 60% of its original value. During the second year, your investment increases by 70% of its first-year value. Your advisor tells you that there must have been a 10% overall increase of your original $14,000 investment. Is your financial advisor using percentages properly? If not, what is your actual percent gain or loss of your original $14 comma 000 investment?
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start:: 14000
aft 1 yr:: 0.4*14000 = 5600
aft 2 yr:: 5600+0.7*14000 = 15400
Note:: 10%*14000 = 1400 ; 14000+1400 = 15400
Advisor is correct.
Cheers,
Stan H.
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Answer by ikleyn(52817)  (Show Source):
You can put this solution on YOUR website! .
The answer heavily depends on what you call the first year investment: the original $14000 or the remaining after the first year.
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