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A plot of land is currently worth $400,000. If land grows in value by 8% a year compounded quarterly, how much was the land originally worth 25 years ago?

Respuesta :

400$ if you take 20 deom it and add a lot
sqdancefan

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Answer:

  about $55,213

Step-by-step explanation:

The multiplier of value for quarterly compounding at rate r for t years is ...

  (1 +r/4)^(4t)

For r = 0.08 and t = 25, this multiplier is ...

  (1.02)^100 ≈ 7.24464611825

Then the value 25 years ago would have been ...

  $400,000/7.24464611825 ≈ $55,213.19

The land was originally worth about $55,213.

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