A property is purchased for $350,000.Based on an annual growth rate of 3%,the resale value at the end of year 10 would be $456,671.

Question

Quizplus · Accepted Answer

Using the formula for compound interest, $FV = PV(1 + r)^n$, where $FV$ is the future value, $PV$ is the present value ($350,000), $r$ is the annual growth rate (3% or 0.03), and $n$ is the number of years (10), the correct calculation is $FV = 350,000(1 + 0.03)^{10}$, which equals approximately $470,000, not $456,671.

A Property Is Purchased for $350,000