Question

Jeremy bought $2,500 worth of gold this week. If the price of gold appreciates at the rate of 5.5%

each year, what will his gold be worth in 7 years?

Answer 1

$3,636.70

Explanation:

Given the following:

Initial price of Gold (A) = $2500

Rate of appreciation (r) = 5.5% = 0.055

Worth of gold in 7 years will be?

Period (p) = 7

Using the compound interest formula :

Let F = final amount

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

n = number of times Appreciation occurs per period.

Since rate compounds yearly, then, n = 1

F = $2500( 1 + 0.055/1)^(7*1)

F = $2500(1 + 0.055)^7

F = $2500(1.055)^7

F = $2500(1.454679161133794609375)

F = $3636.6979

Amount in 7 years = $3,636.70