Problema Solution
A stock investment went up 25% in 2006. Starting at this increased value, what percent would it have to go down in 2007 to be back to its original price at the beginning of 2006?
Answer provided by our tutors
Original price at the beginning of 2006 = x
After 25% increase the value will be:
Value in 2006: (1 + 0.25)x = 1.25x
Let 'p' represent the percentage that it will need to decrease to go back to original price of 'x':
(1 - p)*1.25x = x divde both sides by x
(1 - p)*1.25 = 1
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click here to see the equation solved for p
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p = 0.2 or 20%
It will need to go down by 20% to be back to its original price.