Carly bought a new house for $125,000. The value of the house appreciates approximately 3.5% each year. What will be the value of the house after 10 years?
To calculate the value of the house after 10 years with an annual appreciation rate of 3.5%, we can use the formula for compound interest:
A = P(1 + r)^t
Where:
A = final value of the house after t years
P = initial value of the house (purchase price) = $125,000
r = annual appreciation rate = 3.5% or 0.035
t = number of years = 10
Plugging the values into the formula:
A = $125,000(1 + 0.035)^10
A = $125,000(1.035)^10
A = $125,000(1.419068)
A = $177,383.50
Therefore, the value of the house after 10 years will be approximately $177,383.50.