Question

A home was purchased in 1985 for $125,000. If the value of the home increased 2.5% each year, what would be the value of the house by 2025? Round to the nearest whole number.

Answer 1

Answer: $335,633

Explanation:

First find the number of years difference:

= 2025 - 1985

= 40 years

Use the compound interest formula to find the answer:

= Value * ( 1 + rate) ^ no. of years

= 125,000 * ( 1 + 2.5%)⁴⁰

= $335,633