Question

a companys stock began the day at $30.07 per share. that price drops by $1.27 each hour.
a. what is the price per share after 5 hours?
b. what will it be after 26 hours if this rate continues?
c. explain what the signs of the answers mean in this context.
a. what is the price per share after 5 hours?
○ a. the price per share after 5 hours is $23.72.
○ b. the price per share after 5 hours is -$2.95.
○ c. the price per share after 5 hours is -$2.45.
○ d. the price per share after 5 hours is $23.97.

Explanation:

Step1: Determine the formula for stock - price calculation

The initial price of the stock is $P_0 = 30.07$ dollars per share, and it drops by $d = 1.27$ dollars per hour. The formula for the price $P$ after $t$ hours is $P=P_0 - dt$.

Step2: Calculate the price after 5 hours

Substitute $P_0 = 30.07$, $d = 1.27$, and $t = 5$ into the formula:
$P=30.07-1.27\times5=30.07 - 6.35=23.72$.

Step3: Calculate the price after 26 hours

Substitute $P_0 = 30.07$, $d = 1.27$, and $t = 26$ into the formula:
$P=30.07-1.27\times26=30.07-33.02=- 2.95$.

Step4: Interpret the signs

A positive price in this context means that the stock still has value. A negative price in a real - world sense is not possible for a stock price in the traditional way, but it indicates that based on the linear model, the stock has dropped so much that it has gone below zero. In reality, the stock price would likely stop at zero or have some non - linear behavior before reaching negative values.

Answer:

a. A. The price per share after 5 hours is $23.72.
b. The price per share after 26 hours is - $2.95.
c. A positive answer for the stock price means the stock still has value. A negative answer, while not possible in a real - world stock price in the traditional sense, indicates that according to the linear model used, the stock price has dropped below zero.