Question

Ben collins plans to buy a house for $168,000. If the real estate in his area is expected to increase in value 1 percent each year what will its approximate value be six years from now? Use Exhibit 1-A (Round your FV factor to 3 decimal places and final answer to the nearest question of whole dollar)

Answer 1

Ben Collins’ house six years from now will be $184,4941.

Explanation:

To calculate the approximate value of Ben Collins’ house six years from now, we can use the future value (FV) formula. The formula is given by:

[ FV = PV \times (1 + r)^n ]

Where:

(FV) is the future value of the house,

(PV) is the present value of the house ($168,000),

(r) is the annual interest rate (1 percent or 0.01), and

(n) is the number of years (6).

Using this formula, we can calculate the future value as follows:

[ FV = $168,000 \times (1 + 0.01)^6 ]