Real Estate an office building purchased for $1, 200,000 is appreciating because of rising property values in the city. At the end of each year its value is 105% of its value at the end of the previous year.

Question

a. Use a recursive formula to determine what the value of the building will be 7 years after it is purchased.
b. Use an explicit formula to find the value of the building 4 years after it is purchased.
c. During the eighth year, the building begins to decrease in value at a rate of 8% per year. What would its value be after the 15th year?

Answer 1

5% growth is just

1200000*1.05^n after n years

for #c, we have

1200000*(1.05)^7*(0.92)^8 = 866,581