Assume that a piece of land is currently valued at $50,000. If this piece of land is expected to appreciate at an annual rate of 5% per year for the next twenty years, how much will the land be worth twenty years from now?

Question

Paloma Hurley

Business

22 September, 16:22

Assume that a piece of land is currently valued at $50,000. If this piece of land is expected to appreciate at an annual rate of 5% per year for the next twenty years, how much will the land be worth twenty years from now?

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Answers (1)

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Anise · Answer 1

The correct answer is $132,664.89.

Explanation:

According to the scenario, the given data are as follows:

Present value (PV) = $50,000

Rate of interest (r) = 5%

Time period (n) = 20 Years

So, we can calculate future value by using following formula:

Future value = PV * (1 + r) ^ (n)

= $50000 * (1 + 5%) ^20

= $50000 * (1 + 0.05) ^20

= $132,664.89

Hence, After 20 years land will be worth $132,664.89.