Problema Solution
A piece of property was valued at $50,000 at the end of 1990. Property values in the city where the land is located increase by 10% each year. The value of the land increase continuously. What is the property worth at the end of 2010?
Answer provided by our tutors
at the end of 1990: $50,000
at the end of 1991: $50,000 + 0.10*50,000 = 50,000(1 + 0.10)
at the end of 1992: 50,000(1 + 0.10) + 0.10*50,000(1 + 0.10) = 50,000(1 + 0.10)^2
at the end of (1990 + t): 50,000(1 + 0.10)^t
thus at the end of 2010 we have 2010 - 1990 = 20 so t = 20 and property will be worth
50,000(1 + 0.10)^20 = $336,374.997