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Jerricho bought a house in 2010 valued at $450,000. The house has appreciated by 5% each year from 2010 to 2019. Find the value of Jericho’s house in 2019. (assume 2010 has an x value of 0).

User AgileJon
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To find the value of Jericho's house in 2019, we need to calculate the annual appreciation and add it to the initial value of $450,000.

The annual appreciation rate is 5%, which means the value of the house increases by 5% each year. To calculate the value of the house in 2019, we need to find the cumulative appreciation over the 10-year period from 2010 to 2019.

First, we calculate the appreciation for each year:

Year 1: 5% of $450,000 = $22,500

Year 2: 5% of ($450,000 + $22,500) = $23,625

Year 3: 5% of ($450,000 + $22,500 + $23,625) = $24,806.25

And so on, for each subsequent year.

We can simplify the calculation by using the formula for the future value of a present sum with continuous compounding:

Future Value = Present Value × (1 + Rate)^n

Using this formula, we can calculate the future value of the house in 2019:

Future Value = $450,000 × (1 + 0.05)^10

Calculating this expression gives us the value of Jericho's house in 2019:

Future Value = $450,000 × (1.05)^10 ≈ $450,000 × 1.62889 ≈ $732,000

Therefore, the value of Jericho's house in 2019 would be approximately $732,000.

User Stephenmurdoch
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