Question

Ben Collins plans to buy a house for $220,000. If the real estate in his area is expected to increase in value 2 percent each year, what will its approximate value be seven years from now?

Answer 1

Answer:

$252,780 will be value of House seven years from now.

Explanation:

Current value of house = 220,000

Growth rate = g = 2%

Number of year = n = 7 years

Future Value = PV X (1+g)^n

Future Value = 220,000 X ((1+0.02)^7)

Future Value = 220,000 X 1.149

Future Value = 252,780