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Question 999514: Sally has a stock that earns 10% every year. She says that if the stock does this every year for 5 years, it will have gained 50% overall. Is Sally correct? Why or why not?
Found 2 solutions by solver91311, addingup:
Answer by solver91311(24713)   (Show Source):
Answer by addingup(3677)  (Show Source):
You can put this solution on YOUR website! Let's call the amount at the end of 5 years A. Also, the initial investment we will call P, and r will be the rate (rate is another word for interest) and t is for time. Our formula is:
A= Prt
We are trying to find out what rt will be at the end of 5 years if the investment pays 10%/year:
A= P*0.10*5
A= P*0.5 and if we multiply 0.5*100 we get 50%
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NOTE: %, percent is better described as per-cent, which literally means per one hundred. This is why we divide the percentage by 100, so we can know how much it is per one. For example, if I have 10 dollars and make 20%... well, the number doesn't help me. I don't have 100, I have 10. So I divide the 20/100= .20 and now, since I know it's .20 per one, I can multiply the .20*10 and know that I made 2.
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