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30 December, 09:56

Maxxie purchased a tract of land for $28,500. Today, the same land is worth $46,400. How many years have passed if the price of the land has increased at an annual rate of 6.9 percent?

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  1. 30 December, 12:29
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    The number of years is 7

    Explanation:

    The future value formula can be used in order to arrive the number of years it took the land to appreciate to $46,400 from the initial amount of $28500.

    The formula is given below:

    FV=PV * (1+r) ^N

    FV is the future value of $46,400

    PV is the original purchase price of $28500

    r is the rate of return of 6.9%=0.069

    46400=28500 * (1+0.069) ^N

    divide both sides by 28500

    46400/28500 = (1.069) ^N

    1.628070175 = (1.069) ^N

    taking log of both sides we have

    ln 1.628070175 = N ln 1.069

    N=ln (1.628070175) / ln (1.069)

    N=7.305

    N is approximately 7 years
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