Shirley purchased a plot of land for $19,500. The land appreciates about 3.9% each year. What is the value of the land after five years?
same thing as the other one i answered
the general case is:
new value = (old value)X(1+/-percent change)^years
remember that 1% = 0.01 in the above formuala, and that it's negative if it's "decreasing/depreciating" and positive if it's growing.
To determine the value of the land after five years, we can use the formula for compound interest:
Future Value (FV) = Present Value (PV) * (1 + interest rate)^n
In this case, the present value (PV) is $19,500, the interest rate is 3.9% (or 0.039), and the time period (n) is 5 years.
Applying the formula, we get:
FV = $19,500 * (1 + 0.039)^5
To calculate the value, let's break down the formula step by step:
1. Add 1 to the interest rate: 1 + 0.039 = 1.039
2. Raise the sum to the power of the number of years: 1.039^5 = 1.202
3. Multiply the result by the initial value: $19,500 * 1.202 = $23,409
Therefore, the value of the land after five years would be approximately $23,409.