The price of the common shares of SouthCo was valued at $39.45 at the end of 2009, increased by 8.06% in 2010, and overall increased by 12.60% over the two year period 2009/2010. What was the original price of each share at the beginning of 2009?
ANSWER: Initial Value= $39.45*(100% 8.06%)/(100%+12.60)
Initial Value= $37.86
What do i do if the question was the same but instead of INCREASING both time its DECREASED.((The price of the common shares of SouthCo was valued at $39.45 at the end of 2009, DECREASED by 8.06% in 2010, and overall DECREASED by 12.60% over the two year period 2009/2010. What was the original price of each share at the beginning of 2009?))
To calculate the original price of each share at the beginning of 2009 if it decreased over the two-year period, you need to follow a similar approach:
1. Start with the final value at the end of 2009, which is $39.45.
2. Apply the decrease of 8.06% in 2010 by subtracting it from the final value. This can be done by multiplying the final value by (100% - 8.06%).
Decreased Value in 2010 = $39.45 * (100% - 8.06%)
3. Calculate the overall decrease over the two-year period by subtracting the overall decrease of 12.60% from the decreased value in 2010. This can be done by dividing the decreased value in 2010 by (100% - 12.60%).
Original Value = Decreased Value in 2010 / (100% - 12.60%)
So, plugging in the values:
Decreased Value in 2010 = $39.45 * (100% - 8.06%) = $39.45 * 91.94% = $36.20
Original Value = $36.20 / (100% - 12.60%)
Original Value = $36.20 / 87.40% = $41.43
Therefore, the original price of each share at the beginning of 2009, given the decrease, would be $41.43.