After 5 years, the home is worth $ . Round your answer to the nearest cent.

Question

Raj purchases a new home for $100,000. The value of the home increases by 11% every 3 years. Determine the value of the home after 5 years.

After 5 years, the home is worth $. Round your answer to the nearest cent.

Answer 1

I recommend starting out by trying think of this as a line on a graph. At year zero, the value is $100,000. We add 11% or .11*100,000 to the value for our next point on the line at 3 years.

so our points are (0, 100000) and (3, 111,000)

using the pin slope method, we find the slope is

111,000 - 100000 = 11,000

3 -0. 3

the equation becomes 11,000/3 * x + 100,000 = y

put in 5 for your number of years, x and you get your value at 5 years

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Answer 2

Future value = 100,000*(1+0.11)^(t/3)

= 100,000*(1+0.11)^(5/3)

= $118,997.63