Answer:Her investment would be $8586 in year 5.
Step-by-step explanation:
10000* 0.03= $300.
10,000- 300 =$9700
Year 2.
9700*0.03= $291
9700-391= $9409
Year 3.
9409*0.03=$282.27
9409-282.27= $9126.74
Year 4.
9126.74 * 0.03 = $273.8
9126.74 - 273.8= $8852.
Year 5.
8852 * 0.03 = $265.56
8852 - 265.56 = $8586
C) She should pull off this investment and invest in a more productive company and ensure she diversifies her investment by investing in different companies.
Answer:
a) L = $10,000(0.03)T
b) Investment worth in 5 years = $8,500
c) I advise she withdraws her investment and wait until the market improves before she reinvests.
Step-by-step explanation:
a) Recall the formula for calculating simple interest is given as
I = PRT
But in this case, interest was not made. Loss was made rather. Thus,
L = PRT
P = $10,000
R = 3% = 0.03
T = T
Hence, the function that best model the situation will be;
L = $10,000(0.03)T
b) Using the formula for simple interest given as
I = PRT
where,
P = principal = $10,000
R = rate = 3% = 0.03
T = time = 5 years
We have to first calculate the amount lost in 5 years.
By substitution, we've
I = $10,000×0.03×5
I = $1,500
Since her initial amount was $10,000; what we have to do now is subtract the amount she has lost from the initial amount.
That is,
$10,000 – $1,500 = $8,500
Hence, her investment will worth $8,500.
c) I advise she withdraws her investment for the moment and then wait for the stock market to improve before she reinvests.
