Fred and Wilma purchase a new home for $100,000

Question

Fred and Wilma purchase a new home for $100,000. The value of the home increases by 4% every 3 years. Determine the value of the home after 8 years.

After 8 years, the home is worth $. Round your answer to the nearest cent.

Answer 1

The annual rate by which the home’s value increases is every 3 years. Therefore, the general equation for increased value can be applied

Final amount=initial amount( 1+ amount increase)^(amount increase is applied)

we know the initial amount, 100,000.

we know the amount increase, 4%, which we must convert to a percentage of 4/100 percent, or .04

we need to think about how many times this increase occurs, which is every three years. Within 8 years, this will only happen twice (think: you need one more year, or 9 years, to make the increase occur another time.)

So, we can plug into the equation: 100,000(1.04)^2= 108160

The house has a value of 108,160 dollars after 8 years