The Market value of a house is predicted to increase at an annual rate of 4% for the next five years. If the current market price is $410 000, determine to the nearest dollar, the predicted market price five years from now.
Tn = ar^n-1
T5 = 410,000(o.4)^5-1
= 410 000(0.4)^4
= 410 000 (0.0256)
= 10496
I got this wrong, and I know its wrong, but how did I get it wrong?
Your growth factor is 100% +04% = 1.04
(just like in one of your previous question, the growth factor was 100%-15% = 85% = .85)
Set up a chart just like I did for you other question to really see and understand how the value growth
value now = ...
value after 1 year = ...
value after 2 yrs = ...
etc
BTW, give yourself a nickname instead of "anonymous" so we can tell which your previous posts are.
May I ask why do you have to add 100% to 0.4%?
Ok sure, when I post my next post, I'll be sure to use a different name than Anonymous. You'll see me as
-Untamed-
It seems like you made a small mistake in your calculation. Let's go through the correct calculation step by step.
The formula you used is correct for calculating the future value of an investment with a growth rate. However, you made an error when calculating the growth rate. You wrote 0.4 as the growth rate instead of 0.04. The annual growth rate of 4% should be expressed as 0.04 in decimal form.
So, let's correct the calculation:
T5 = $410,000 * (1 + 0.04)^5
First, we need to add 1 to the growth rate:
1 + 0.04 = 1.04
Now we can plug in the values and calculate:
T5 = $410,000 * (1.04)^5
≈ $410,000 * 1.21665
≈ $498,824
Therefore, the predicted market price of the house five years from now is approximately $498,824.
Remember to be careful with decimal conversions and double-check your calculations to avoid errors.