Question

John Albertson purchases a plot of land for $15,000 exactly 3 years ago. If the land has appreciated 12% each year, what is its value now?1. $20,400.

2. $16,800.
3. $21,074.
4. $45,000.
5. $25,200.

Answer 1

3. $21,074.

Step-by-step explanation:

The computation of the value now is shown below:

As we know that

Future value = Present value × (1 + rate of interest)^number of years

= $15000 × (1 + 0.12)^3

= $15,000 × 1.40493

= $21,073.95

= $21,074

Hence, the value now is $21,074

Therefore the correct option is 3.

We simply applied the above formula so that the correct value could come

And, the same is to be considered