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Question 2: The share price of a public company fell 4% on each day of a week, from Monday to Friday. What is the price of a share at the end of the trading day on Friday, if the share was valued at $20 on the Sunday of the same week?

I could do this the long way by calculating the depreciation for each day as: monday: 20 -4% of 20 tuesday:monday-4% of monday wed: tuesday-4% of tuesday and so on to friday

This method takes a lot of time. What is the shortest way of finding the answer? could depreciation formula could be used for it?

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rate falls only from monday to friday –  sonam Aug 22 '12 at 2:48
    
Weekends - No rise, no fall, just steady? –  FrenzY DT. Aug 22 '12 at 2:49
    
I thought weeks started on Mondays! –  FrenzY DT. Aug 22 '12 at 2:59
    
ans is (1 - .04)^5·$20 –  sonam Aug 22 '12 at 3:00

2 Answers 2

up vote 4 down vote accepted

The closing price on Friday is $20(0.96)^5$.

Similarly, if the price increases by say $6\%$ each day, then in $5$ days it gets multiplied by $(1.06)^5$.

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Sunday - price = $20$

Monday - $20 \times 0.96$

Tuesday - $20 \times 0.96^2$

Wednesday - $20 \times 0.96^3$

Thursday - $20 \times 0.96^4$

Friday - no weekend days to consider - price = $20 \times (0.96)^5$

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