A share of stock worth 100 dollars loses 90% of its value. Then, over the next year, the value of the stock increases by 90%. What is the new value of the stock?
To determine the new value of the stock, we need to (1) calculate the amount by which the stock lost 90% of its value and (2) calculate the amount by which the stock gained 90% of its value, and finally (3) add those two amounts to the original value of the stock.
1. To find out how much the stock lost when it decreased by 90%, we can multiply the original value of the stock by 90%, or 0.90.
Original value of the stock = $100
Loss in value = $100 * 0.90 = $90
2. To calculate the amount the stock gained when it increased by 90%, we can multiply the loss in value by 90%, or 0.90.
Loss in value = $90
Gain in value = $90 * 0.90 = $81
3. Finally, we can add the gain in value to the loss in value and the original value of the stock to find the new value of the stock.
New value of the stock = Original value + Gain in value
= $100 + $81
= $181
Therefore, the new value of the stock is $181.