Mri.Williams bought a plot of land for $4o,oo. The value of the land was appreciated by 7% each year. Calculate the value of the land after a period of two years.
(1.07)^2 x 40,000 = $45,796.
To calculate the value of the land after a period of two years, you need to apply the annual appreciation rate of 7% to the original purchase price.
First, let's calculate the appreciation for the first year:
Appreciation for the first year = Original purchase price * Annual appreciation rate
Appreciation for the first year = $40,000 * 0.07 = $2,800
Next, add the appreciation to the original purchase price to find the value of the land after the first year:
Value after the first year = Original purchase price + Appreciation for the first year
Value after the first year = $40,000 + $2,800 = $42,800
Now, let's calculate the appreciation for the second year using the value after the first year as the new purchase price:
Appreciation for the second year = Value after the first year * Annual appreciation rate
Appreciation for the second year = $42,800 * 0.07 = $2,996
Finally, add the appreciation for the second year to the value after the first year to find the value of the land after two years:
Value after two years = Value after the first year + Appreciation for the second year
Value after two years = $42,800 + $2,996 = $45,796
Therefore, the value of the land after a period of two years is $45,796.