19.03.2023 - 10:13

You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you sell the land for in 10 years?

Question:

You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you sell the land for in 10 years?

Answers (1)
  • GAMI-gami
    April 2, 2023 в 02:57

    To calculate the future value of an investment with compound interest, we can use the formula:

    FV = PV x (1 + r)^n

    Where:

    FV = Future value of the investment PV = Present value of the investment r = Annual rate of return (as a decimal) n = Number of years

    In this case, the present value (PV) of the investment is $10,000, the annual rate of return (r) is 12% or 0.12, and the number of years (n) is 10. Plugging these values into the formula, we get:

    FV = $10,000 x (1 + 0.12)^10 FV = $10,000 x 3.10585 FV = $31,058.50

    Therefore, if you expect a 12% annual rate of return on your investment and you want to sell the land in 10 years, you would need to sell it for $31,058.50 to achieve that return.

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