Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.1 Percent, Sales Tax and Discounts - Exercise Set 8.1: 57

Answer

The financial adviser is not using percentages properly. The actual percent loss of the original investment is 2%.

Work Step by Step

We can find the amount that the original investment decreased. $decrease = (0.30)(\$10,000) = \$3000$ We can find the value of the original investment after a decrease of 30%. $value = \$10,000 - \$3000 = \$7000$ We can find the amount that the first-year value increased. $increase = (0.40)(\$7,000) = \$2800$ We can find the value of the investment after an increase of 40%. $value = \$7,000 + \$2800 = \$9800$ The original investment decreased by $\$200$. We can express this decrease as a decimal. $\frac{\$200}{\$10,000} = 0.02$ To express a decimal as a percent, we can move the decimal point two places to the right. $0.02 = 2\%$ The financial adviser is not using percentages properly. The actual percent loss of the original investment is 2%.
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