Question

Tammy's home cost her S184,000. She lives in an area with a lively real estate market, and her hormincreases in value by 3.5%

every year. If Tammy sels her home after thirteen years, how much profit wil she have made, to the nearest hundred dollars?
a s8,500
b.
C.
d
7,800
S83,700
S103,800
Please select the best answer from the choices provided
O
A
B
C
D
O
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Answer D 103,800

Answer 1

Cost of Tammy's house =$184000

Rate of interest = 3.5% per annum

After 13years price will be

`P(t) = 184000 {(1 + (3.5)/(100)) }^(t) \\ P(t) = 184000 {(1 + 0.035)}^(t) \\ P(13) = 18400 {(1.035)}^(13) \\ P(13) =\$ 287768`

Total profit= $(287767-184000)= $103768

D. $103800 is the right answer.

Answer 2

• D. $103800

Explanation:

Initial value of house:

• $184000

Yearly increase rate of value:

• 3.5%

Time

• 13 years

Since the increase is concerning the current price it would be exponential growth.

The function would be:

• V(t) = 184000*(1 + 3.5/100)^t, where V is the value after t years

For t= 13 we get:

• V(13) = 184000*(1.035)^13 = 287800

Profit made would be:

• 287800 - 184000 = 103800

Correct option is D.