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A homes value increases at a average rate of 5.5% each yea. The current value is $120,000. What function can be used to find the value of the home after X years?

User NgocLK
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1 Answer

3 votes

Answer: the function is

A = 120000(1.055)^x

Explanation:

A homes value increases at an average rate of 5.5% each year. The growth rate is exponential. We would apply the formula for exponential growth which is expressed as

A = P(1 + r/n)^ nt

Where

A represents the value of the home after t years.

n represents the period of growth

t represents the number of years.

P represents the initial value of the home.

r represents rate of increase in value.

From the information given,

P = 120000

r = 5.5% = 5.5/100 = 0.055

n = 1

Therefore

A = 120000(1 + 0.055/1)^ x × 1

A = 120000(1.055)^x

User Sean McCarthy
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