If Angela's $98,760 home appreciates three percent a year, will she have enough appreciation to try to sell the home for a $15,000 profit in five years?

Question

Alan Briggs

Business

13 December, 02:05

If Angela's $98,760 home appreciates three percent a year, will she have enough appreciation to try to sell the home for a $15,000 profit in five years?

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Answers (1)

Know the Answer?

Keon Hoover · Answer 1

Yes, she will (total profit of $15,730)

Explanation:

We must determine the future value of Angela house:

future value = present value (1 + appreciation rate) ⁿ

present value = $98,760 appreciation rate = 3% n = 5

FV = $98,760 (1.03) ⁵ = $98,760 x 1.1592740743 = $114,490

now the difference between the future value and the present value = $114,490 - $98.760 = $15,730