Question

Maxxie purchased a tract of land for $28,500. Today, the same land is worth $46,400. How many years have passed if the price of the land has increased at an annual rate of 6.9 percent?

Answer 1

The number of years is 7

Step-by-step explanation:

The future value formula can be used in order to arrive the number of years it took the land to appreciate to $46,400 from the initial amount of $28500.

The formula is given below:

FV=PV*(1+r)^N

FV is the future value of $46,400

PV is the original purchase price of $28500

r is the rate of return of 6.9%=0.069

46400=28500*(1+0.069)^N

divide both sides by 28500

46400/28500=(1.069)^N

1.628070175 =(1.069)^N

taking log of both sides we have

ln 1.628070175 =N ln 1.069

N=ln (1.628070175)/ln (1.069)

N=7.305

N is approximately 7 years