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# The price of a stock increased 50 percent each year from May 2001 to

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Manager
Joined: 25 Sep 2018
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Location: United States (CA)
Concentration: Finance, Strategy
GMAT 1: 640 Q47 V30
GPA: 3.97
WE: Investment Banking (Investment Banking)
The price of a stock increased 50 percent each year from May 2001 to  [#permalink]

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10 Oct 2018, 07:09
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75% (00:58) correct 25% (00:56) wrong based on 4 sessions

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The price of a stock increased 50 percent each year from May 2001 to May 2005. If the price of the stock was $32.40 in May 2005, what was the price of the stock in May 2001? A)$3.00
B)$6.40 C)$9.60
D)$12.00 E)$16.80

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The price of a stock increased 50 percent each year from May 2001 to  [#permalink]

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10 Oct 2018, 07:29
1
Abhi077 wrote:
The price of a stock increased 50 percent each year from May 2001 to May 2005. If the price of the stock was $32.40 in May 2005, what was the price of the stock in May 2001? A)$3.00
B)$6.40 C)$9.60
D)$12.00 E)$16.80

if it increased 50% each year this equals to a multiplier of $$= (1+\frac{50}{100}) = 1.50 = \frac{3}{2}$$

from 2001 to 2005 = 4 years.

let x be the price on 2001.

$$32.40 = (3/2)^4 * x$$

$$0.40 =\frac{2}{5}$$

$$32*5 = 160$$

$$32.40 = \frac{160}{5} + \frac{2}{5}=\frac{162}{5}$$

$$\frac{162}{5} = \frac{81}{16} * x$$

$$\frac{2}{5} = \frac{1}{16} * x$$

$$x = \frac{32}{5}$$ = $$\frac{30}{5} + \frac{2}{5} = 6 + 0.4 = 6.40$$

The price of a stock increased 50 percent each year from May 2001 to   [#permalink] 10 Oct 2018, 07:29
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# The price of a stock increased 50 percent each year from May 2001 to

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