Question

PLEASE HELP!!!!!

In 2012 a home was purchased for $185,000. It is expected that the home will increase in value 1.5% each year over the next 30 years. What is the home's value in 2030?
(leave answer in terms of money)

Answer 1

$289,169.84 (to the nearest cent)

Explanation:

Compound interest is based on the principal amount and the interest that accumulates on it in every period.

Compound Interest = P (1 + r)^n

where P = principal amount, r = annual interest rate (as a decimal), n = term, in years​

So for this problem:

P = 185000

r = 1.4 ÷ 100 = 0.015

n = 30

Therefore,

Compound Interest = P (1 + r)^n

= 185000 x (1 + 0.015)^30

= 185000 x (1.015)^30

= 289169.8408...

= $289,169.84 (to the nearest cent)