Question

6) A new home is bought for $254,000, and home values appreciate by 1.5% each year. If you wantto sell your home in 8 years, how much will your house be worth? Round to the nearest hundredth.

Answer 1

Step 1:

Write the formula worth of the house after 8 years.

$\begin{gathered} \text{Amount = P(1 + r)}^t \\ P\text{ = Cost price of the house} \\ r\text{ = rate} \\ t\text{ = time} \end{gathered}$

Step 2: Given data

P = $254000

r = 1.5% = 0.015

t = 8 years

Step 3: Substitute the values of P, r and t.

$\begin{gathered} \text{Amount = 254000 }\times(1+0.015)^8 \\ =\text{ 254000 }\times1.015^8 \\ =\text{ 254000 }\times\text{ 1.126}492587 \\ =\text{ \ 286,}129.12 \end{gathered}$

Step 4: Final answer

The house worth

$286,129.12