Fred purchased a city lot for $39,900.That lot has appreciated at 6.5 percent annually and is now valued at $287,400.How long has Fred owned this lot?

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to find out how many years it takes for the value of the lot to appreciate from $39,900 to $287,400 with an annual rate of 6.5%. Let t be the number of years Fred has owned the lot.

$287,400 = $39,900(1 + 0.065)t

Dividing both sides by $39,900 and then taking the natural logarithm of both sides, we get:

ln(7.208) = 0.065t

Solving for t, we get:

t = ln(7.208)/0.065 ≈ 31.35 years

Therefore, choice D) is the correct answer.

Fred Purchased a City Lot for $39,900