Question

Twenty years ago, Mr. Davis purchased his home for $160,000. Since then, the value of

the home has increased about 5% per year. How much is the home worth today?

Answer 1

The home is worth $424,528 today

Explanation:

To get the worth of the home today, we are going to use the exponential formula

We have this as follows;

A = P(1 + r)^t

where A is the value of the house after some time t

P is the initial value the home was worth which is $160,000

r is the rate of increase in the price of the home which is 5% = 5/100 = 0.05

t is the number of years which is 20

substituting these values;

A = 160,000(1 + 0.05)^20

A = $424,528