Question

1) Mr. Rios bought a house in 1960 for $20,000. The value of the house increased by

approximately 5% each year. Which of the following equations will give the value, A, the
approximate value of the house after x years?
A- A = 20000(0.5)*
B- A = 20000(1.5)
C- A = 20000(0.05)
D- A = 20000(1.05)*

Answer 1

A = 20,000(1.05)^x

Explanation:

To get the approximate value of the house after x years, we will use the compound interest formula

A = P(1+r)^n

P is the principal = $20,000 (cost of house)

r is the rate = 5% = 0.05

x is the time

Substitute into the expressio

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

A = 20,000(1.05)^x

Hence the required expression is A = 20,000(1.05)^x