Question

At the start of 2014 Lucy's house was worth ?200000 the value of the house increased by 5% every year work out the value of her house at the start of 2017

Answer 1

$231525.00

Explanation:

We know that the formula to calculate the increase at a certain growth rate is,

`V_f=V_i*(1+i)^n`

Where,
`V_f` is the value of house at the start of 2017

`V_i` is the value of her house in 2014

'i' is the rate at which value is increasing

n is the number of years (periods).

From 2014 to 2017 it is 3 years, so n = 3.

Putting the values we get,

`V_f= 200000 (1+0.05)^3`

`V_f= 200000(1.05)^3`

`V_f= 200000 * 1.157625`

`V_f= 231525`

So the value of her house at the start of 2017 will be $231525.00

(I have assumed that the valuation is done in dollars).