math
posted by Daniel on .
An antique dresser was purchased for $7500 in 2005. The dresser increases in value by 9% per year. Find the value of the dresser in 2025.
So i thought it would be :
A = 7500(1+0.09)^(20)
A = 42033...
However I have been told it could be:
Value = 7500 + 7500*0.09*20 = $21,000
Which is the correct method?

the first method uses compound interest which would be the normal way of doing it.
The second uses simple interest, a method used for very short periods of time and certainly does not fit into a 25 year period
I would be my money on
A = 7500(1+0.09)^(20) 
Thank you very much.