Question

A company bought a parcel of land twenty years ago. The land is currently worth $575,000. The yearly appreciation rate has been 3.7%. About how much did the company pay for the land

Answer 1

The company paid $278,031

Step-by-step explanation:

Giving the following information:

A company bought a parcel of land twenty years ago. The land is currently worth $575,000. The yearly appreciation rate has been 3.7%.

To calculate the past value of the land, we need to use the following formula:

PV= FV/(1+i)^n

PV= present value (20 years ago)

n= 20

FV= 575,000

i= 0.037

PV= 575,000 / (1.037^20)

PV= $278,031