Question

Jake invests $1,000 in stocks. In the 1st month, the invested amount grows by 5% and in the 2nd month, the amount after the 1st month decreases by 4%. What will Jake's investment amount to at the end of the 2 months?

• A. $960
• B. $1,010
• C. $1,008
• D. $990

Answer 1

The correct option is C $1,008

$Month1:\text{Jake's investment grows by 5\%.}$

$⟹\$1,000+\$1,000\times \frac{5}{100}=\$1,000+\$50=\$1,050$

$Month2:\text{Jake's investment decreases by 4\%}\text{from its value at the end of month 1.}$

$⟹\$1,050-\$1,050\times \frac{4}{100}=\$1,050-\$42=\$1,008$