Shirley purchased a plot of land for $19,500. The land appreciates about 3.9% each year. What is the value of the land after five years?
Well, Shirley certainly knows how to make an investment! Let's calculate the value of the land after five years.
To find the value after one year, we need to multiply the initial value of $19,500 by 1.039 (1 + 3.9%). So, after the first year, the land is worth $20,240.50.
Now, let's calculate the value after two years. We multiply the value of the land after one year, $20,240.50, by 1.039 again. This gives us $20,969.88 (approximately).
For the third year, we repeat the same process and get a value of $21,726.85.
After four years, the value becomes $22,513.84.
And finally, after five years, the value of Shirley's land would be approximately $23,331.16!
So, in just five years, Shirley's land has appreciated in value by about $3,831.16. Quite the impressive investment, wouldn't you say?
To find the value of the land after five years, we need to calculate the appreciation for each year and add it to the original value of the land.
First, let's calculate the appreciation for each year. The appreciation rate is given as 3.9%.
To find the appreciation for the first year, we can multiply the original value of the land by the appreciation rate:
Appreciation for Year 1 = $19,500 * 3.9% = $760.50
Now, let's find the appreciation for the second year. We need to add the appreciation from the first year to the original value of the land and then multiply it by the appreciation rate:
Appreciation for Year 2 = ($19,500 + $760.50) * 3.9% = $797.42
We repeat this process for each subsequent year, adding the previous year's appreciation to the original value and then multiplying by the appreciation rate.
Appreciation for Year 3 = ($19,500 + $760.50 + $797.42) * 3.9% = $834.97
Appreciation for Year 4 = ($19,500 + $760.50 + $797.42 + $834.97) * 3.9% = $873.17
Appreciation for Year 5 = ($19,500 + $760.50 + $797.42 + $834.97 + $873.17) * 3.9% = $911.98
Finally, to find the value of the land after five years, we add the appreciation for each year to the original value:
Value of the land after five years = $19,500 + $760.50 + $797.42 + $834.97 + $873.17 + $911.98 = $22,677.04
Therefore, the value of the land after five years will be $22,677.04.