Question

A house is currently valued at $215,000 and its value is anticipated to increase by 1.5% each year. What will the value of the house be after 8 years?

A) $237,294
B) $226,490
C) $253,151
D) $201,500

Answer 1

The value of the house after 8 years is approximately $237,294. Hence, option A) is correct.

Step-by-step explanation:

To calculate the value of the house after 8 years, we need to use the formula for compound interest:

A = P(1 + r)^t

where:
A is the future value of the house
P is the initial value of the house ($215,000)
r is the annual interest rate (1.5% or 0.015)
t is the number of years (8)

Plugging in the values, we have:

A = 215,000(1 + 0.015)^8

Calculating that expression, the value of the house after 8 years is approximately $237,294 (Option A).