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18 January, 07:22

Shelby purchased a plot of land for $27,500. the land appreciates about 2.9% each year. what is the value of the land after nine years?

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  1. 18 January, 07:54
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    Original cost of the land = $27,500

    The land appreciates in value by 2.9% each year.

    After 1 year, the value is

    $27500 * (1 + 0.029) = $27500*1.029

    After 2 years, the value is

    $27500*1.029*1.029 = $27500 * (1.029²)

    By induction, the value after n years is

    $27500 * (1.029ⁿ)

    After 9 years (n=9), the value is

    $27500 * (1.029⁹) = $35,568.95

    Answer: The value after 9 years is $35,568.95
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