Question

Joseph paid $105,000 for his home twenty years ago. Since then, his house has increased its property value by 2.0% every year. In addition, Joseph has made renovations and improvements to the house which will increase its sale value by $28,700. If Joseph sells his home, how much profit will he make, to the nearest hundred dollars?
a.
$79,700
b.
$84,700
c.
$93,700
d.
$122,400

Answer 1

Sale price = 105,000*(1.02)^20 + 28,700.
(1.02)^20 ≈ 1.485947, so sale price ≈ 105,000*1.485947 + 28,700 = 155,964.44 + 28,700 = 184,664.44.
Profit = sale price − original 105,000 ≈ 184,664.44 − 105,000 = 79,664.44 ≈ $79,700 (to the nearest hundred).

Answer: a. $79,700