The land on which the building will be constructed has been

The land on which the building will be constructed has been projected to increase in value at a compound rate of 6% per year without the proposed building. In anticipation of construction activity, the owners of the land are asking a price of $ 1,000,000. If you pay the full $ 1,000,000 price, and it continues to escalate at 6% per year, what will its value be in ten years ?  

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Solution

Value of the land when the payment was done = 1,000,000
The compound rate (r)= 6%
Time (n) = 10
The value of land after 10 years formula = Land price paid * ( 1+ r)ⁿ = 1,000,000 * ( 1+ 6%)¹⁰ = 1790847..70

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