Question

The owner of a collector car sold the car at a auction. The owner bought it in 1977 when it's value was $7500. The value of the car increased at the rate of 5.5% per year. The auction took place in 2000. What is the approximate value of the car at the time of the auction.

Answer 1

Answer:

$25,695

Step-by-step explanation:

You can calculate the price of the car in 2000 using the formula to calculate the future value:

FV=PV(1+r)^n

FV= future value

PV= Present value: $7,500

i= rate: 5.5%

n= number of years: 2000-1977= 23

FV= 7,500*(1+0.055)^23

FV= 7,500*(1.055)^23

FV= 7,500*3.426

FV= 25,695

According to this, the approximate value of the car at the time of the auction is $25,695.