Michael and Sandy purchased a home for $100,000 five years ago.If it appreciated 6% annually,what is it worth today?
A)$100,000
B)$106,000
C)$130,000
D)$133,823
E)$135,603

Question

Quizplus · Accepted Answer

To calculate the current value of the home, we have to use the compound interest formula:

A = P(1 + r/n)^(nt)

where A is the final amount, P is the initial amount, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time in years.

In this case, A = ?, P = $100,000, r = 6% = 0.06, n = 1 (compounded annually), and t = 5. Plugging in these values, we get:

A = $100,000(1 + 0.06/1)^(1*5)
A = $133,822.88

Therefore, the home is worth $133,822.88 today, which is closest to option D ($133,823).

Michael and Sandy Purchased a Home for $100,000 Five Years