You save $5,000.00 and invest 60% of it in stocks while leaving the rest in a savings account earning a 4.9% APR. The stock increases 9% in the first year and loses 4% of its value the second year. What is the total amount gained during the 2 years? What would the gain have been if all of the investment had been left in the savings account?

Question

Mathematics

Clark Tapia

29 August, 06:35

You save $5,000.00 and invest 60% of it in stocks while leaving the rest in a savings account earning a 4.9% APR. The stock increases 9% in the first year and loses 4% of its value the second year. What is the total amount gained during the 2 years? What would the gain have been if all of the investment had been left in the savings account?

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Abby · Answer 1

Amount invested in stocks

5,000*0.60

=3,000

after one year gains 9%

3,000 * (1+0.09)

=3,270

After second year loses 4%

3,270 * (1-0.04)

=3,139.2 amount after second year

So Stocks gained 139.2 (3139.2-3000)

Amount of saving account

5,000*0.40

=2,000

After 2 years

2,000 * (1+0.049) ^ (2)

=2,200.802

So it gained 200.802 (2200.802-2000)

Total amount after 2 years

3,139.2+2,200.802

=5,340.002

Gained 340.002 (5340.002-5000)