Answer:
A = $265
Explanation:
- Before we begin solving the problem, we should examine what each variable in the appreciation formula means.
In the appreciation formula:
- A is the current value of the item,
- P is the original value of the item,
- r is the appreciation rate as a decimal,
- and t is the time in years.
Now we can determine which values we can substitute for the variables and which variable we're solving for:
- We want to know the current value, so we're solving for A.
- The original value is $176, so it's P.
- 6% as a decimal is 0.06, so it's r.
- The necklace was purchased 7 years so, so it's t.
Thus, we can plug in 176 for P, 0.06 for r, and 7 for t to solve for A, the current amount of the necklace rounded to the nearest dollar:
Step 1: Add inside the parentheses:
A = 176(1 + 0.06)^7
A = 176(1.06)^7
Step 2: Raise 1.06 to the 7th power:
A = 176 * 1.503630259
Step 3: Multiply 176 and 1.503630259 to find A, the approximate value of the necklace today:
A = 264.6389256
A = 265
Thus, the current value of the necklace is about $265.