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29 May, 01:37

Bob bought some land costing $15,390. Today, that same land is valued at $44,817. How long has Bob owned this land if the price of land has been increasing at 5 percent per year?

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  1. 29 May, 01:44
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    Bob bought the land 21 years and 332 days ago.

    Explanation:

    Giving the following information:

    Bob bought some land costing $15,390. Today, that same land is valued at $44,817.

    To calculate the number of years passed we need to use a variation of the Future Value formula:

    FV=PV * (1+i) ^n

    Isolating n:

    n=[ln (FV/PV) ]/ln (1+i)

    n = [ln (44,817/15,390) / ln (1.05) ]

    n = 21.91

    0.91*365 = 332

    Bob bought the land 21 years and 332 days ago.
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