Question

If a property was worth $233,087 two years ago and it appreciated at the rate of 6% each year, how much is it worth now?

(a) $261,057
(b) $259,633
(c) $263,942
(d) $261,897

Answer 1

To calculate the present value of the property, the formula for compound interest is used. After applying the growth rate of 6% over two years to the original value of $233,087, the current value comes out to be $261,897. Thus, the correct answer is (d) $261,897.

Step-by-step explanation:

The question asks us to calculate the present value of a property that appreciated at a rate of 6% per annum over two years. To find the current value of the property that was worth $233,087 two years ago, we can use the formula for compound interest:

Current Value = Original Value x (1 + Rate)^Number of Periods

Plugging in the values gives us:
Current Value = $233,087 x (1 + 0.06)^2
Current Value = $233,087 x (1.06)^2
Current Value = $233,087 x 1.1236
Current Value = $261,897.04

Therefore, the correct answer is (d) $261,897.