Question

Real estate values in a town are increasing at a rate of 14% per year. Mrs. Knoxville purchased a building for $590,000 in 2012.

How much can she expect to sell the building for in 2020, assuming this trend continues?

Enter your answer in the box. Round to the nearest whole dollar.

Answer 1

Answer:\

180000

Step-by-step explanatii took

Answer 2

$1808263

Explanation:

We're given with the below information:-

Initial price of the building = Principal amount (P) = $590000

Rate of interest (r) = 14% = 0.14

Time in years (t) = 2020 - 2012 = 8

The formula to calculate the final amount where interest is continuously compounded each year is :-

`A = Pe^(rt)` [e is the mathematical const = 2.71828]

Plugging in the values of P, e, r, and t in the above formula, we get

`A = 590000*2.71828^(0.14*8)`

=> A= 1808262.6

=> A = $1808263 (rounded off to the nearest whole dollar)

So, she expect to sell the building in 2020 for an amount of $1808263