Sarah invested $16 000 in a unit trust five years ago.
The value of the unit trust has increased by 6% per annum for each
of the last 3 years.
Before this, the price had decreased by 4% per annum.
Calculate the current price of the unit trust.
Give your answer to the nearest whole number of pounds.
please help!!
16000 * 0.96^2 * 1.06^3 = _____
Thank you for the answer. Where did you get 0.96 from ?
nevermind :)
To calculate the current price of the unit trust, we need to understand the different stages of growth and decline over the past 5 years.
First, we will calculate the price of the unit trust after 2 years of decline:
Step 1: Calculate the price after the first year of decline:
Price after 1 year = Initial price - (Initial price * 4%)
Price after 1 year = $16,000 - ($16,000 * 0.04) = $16,000 - $640 = $15,360
Step 2: Calculate the price after the second year of decline:
Price after 2 years = Price after 1 year - (Price after 1 year * 4%)
Price after 2 years = $15,360 - ($15,360 * 0.04) = $15,360 - $614.4 = $14,745.6
Now that we have the price after 2 years of decline, we can calculate the price after the last 3 years of growth:
Step 3: Calculate the price after the first year of growth:
Price after 3 years = Price after 2 years + (Price after 2 years * 6%)
Price after 3 years = $14,745.6 + ($14,745.6 * 0.06) = $14,745.6 + $884.74 = $15,630.34
Step 4: Calculate the price after the second year of growth:
Price after 4 years = Price after 3 years + (Price after 3 years * 6%)
Price after 4 years = $15,630.34 + ($15,630.34 * 0.06) = $15,630.34 + $937.82 = $16,568.16
Step 5: Calculate the price after the third year of growth:
Price after 5 years = Price after 4 years + (Price after 4 years * 6%)
Price after 5 years = $16,568.16 + ($16,568.16 * 0.06) = $16,568.16 + $994.09 = $17,562.25
Therefore, the current price of the unit trust, after 5 years, is approximately $17,562. To convert this to pounds, you would need to know the exchange rate between dollars and pounds.