Question

If a house is worth $225,000 when it was bought and its value appreciates by 5% every year, how much will it be worth in 5 years? Round to the nearest whole dollar amount.

Answer 1

$287.2 (After I round it)

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Answer 2

The house will be worth $287,163 in 5 years.

Explanation:

To solve this problem, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

A = the final amount (the value of the house in 5 years)

P = the initial amount (the value of the house when it was bought)

r = the annual interest rate (5%)

n = the number of times the interest is compounded in a year (we will assume it is compounded annually, so n = 1)

t = the number of years (5)

Plugging in the values, we get:

A = 225,000(1 + 0.05/1)^(1*5)

A = 225,000(1.05)^5

A = 225,000(1.27628)

A = $287,163.00

Therefore, the house will be worth approximately $287,163 in 5 years, rounded to the nearest dollar.