a) The compound interest equation is [tex]C = 4250 \cdot 0.9675^{t}[/tex].
b) There is an approximate loss of $ 987.16.
c) The stock will take approximately 12.979 to decrease by half.
How to find stock losses by compound interest model
Compound interest model represents the gain of a deposit as a function of the number of periods and initial amount. The model is represented below:
[tex]C = C_{o}\cdot (1+r)^{t}[/tex] (1)
Where:
- [tex]C_{o}[/tex] - Initial capital, in monetary units.
- [tex]r[/tex] - Interest rate.
- [tex]t[/tex] - Period number.
- [tex]C[/tex] - Current capital, in monetary units.
Capital decreases in time when interest rate is a negative number. The equation that models the situation is [tex]C = 4250 \cdot 0.9675^{t}[/tex] and the current capital after eight years is:
C = 4250 · 0.9675⁸
C = 3262.84
That represents an approximate loss of $ 987.16.
And the number of periods required to decrease the capital by half is:
[tex]2125 = 4250 \cdot 0.9675^{t}[/tex]
[tex]0.5 = 0.9675^{t}[/tex]
㏒ 0.5 = t · log 0.9675
t ≈ 20.979
The stock will take approximately 12.979 to decrease by half.
To learn more on compound interest: https://brainly.com/question/14295570
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