Question

You bought an antique coin that was worth $500.It increases value by 11% every 2 years for20 years. What is the coin now worth?

Answer 1

The Solution:

Given:

A coin worth $500, increases in value by 11% every 2 years for 20 years.

We are asked to find its worth in value after 20 years.

Step 1:

We shall use the compound interest formula:

`V=P(1+(r)/(100))^t`

In this case,

`\begin{gathered} t=\text{time ( in period)}=2\text{ years per period=10 periods} \\ P=\text{ current value =\$500} \\ V=\text{ future value =?} \\ r=\text{ rate=11\%} \end{gathered}`

Step 2:

Substituting these values in the formula, we get:

`V=500(1+(11)/(100))^(10)=500(1+0.11)^(10)`
`V=500(1.11)^(10)=1419.710\approx\text{ \$1419.71}`

Therefore, the correct answer is $1419.71