4 You have a property that was purchased on your behalf in 1

4) You have a property that was purchased on your behalf in 1982 for $80,000. It has appreciated at a rate of 8%. What is it worth today?

Solution

Calculation of property\'s today\'s worth i.e. in the year 2018 We can use future value of sum formula to calculate this value. Future value = P x (1+r)^n Future value = property\'s today\'s worth = ? P = Property\'s purchase cost = $80000 r = appreciation rate per year = 8% n = no.of years from 1982 to 2018 = 36 Future value = 80000 x (1+0.08)^36 Future value = 80000 x 15.96817 Future value = 12,77,453.75 Property\'s today\'s worth = $12,77,453.75