Question

Joey buys a home for $266,490. His home is predicted to increase in value 5% eachyear. What is the predicted value of his home in 14 years? Round answer to thenearest whole number.

Answer 1

SOLUTION

The cost of the house was $266,490

Increase rate = 5%

The cost of the house in n years time is given as

$A=266,490(1.05)^n$

In 14 years, the cost will be

$A=266,490(1.05)^{14}$

Calculate the value

$\begin{gathered} A=266,490\times1.9799 \\ A=527650 \end{gathered}$

Therefore, the value of the house in 14 years will be $527,650