A simple depreciation problem

Question

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?

rate falls only from monday to friday – sonam Aug 22 '12 at 02:48 — sonam, Aug 22 '12 at 02:48
Weekends - No rise, no fall, just steady? – Frenzy Li Aug 22 '12 at 02:49 — Frenzy Li, Aug 22 '12 at 02:49
I thought weeks started on Mondays! – Frenzy Li Aug 22 '12 at 02:59 — Frenzy Li, Aug 22 '12 at 02:59

André Nicolas · Accepted Answer · 2012-08-22T03:00:23.643

4

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 $(1.06)^5$.

edited Aug 22 '12 at 03:00

answered Aug 22 '12 at 02:55

André Nicolas

507,029

score 1 · Answer 2 · answered Aug 22 '12 at 02:57

1

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 = $20 \times (0.96)^5$

answered Aug 22 '12 at 02:57

Mark Bennet

100,194

A simple depreciation problem

2 Answers2