Question

possible points: 20
in 2000, the value of a home is $170,000. since then, its value has increased 5% per year. what will the value of the home be in 2020? round your answer to the nearest $1000.
a $736,000
b $451,000
c $340,000
d $9000

Explanation:

Step1: Identify time period

$2020 - 2000 = 20$ years

Step2: Use compound growth formula

The formula for compound growth is $A = P(1 + r)^t$, where $P=\$170000$, $r=0.05$, $t=20$.
$A = 170000(1 + 0.05)^{20}$

Step3: Calculate growth factor

$(1.05)^{20} \approx 2.653297705$

Step4: Compute total value

$170000 \times 2.653297705 \approx 451060.61$

Step5: Round to nearest $1000

$\approx \$451000$

Answer:

B. $451,000