Question

An oil painting originally cost $2500 and increases in value at a rate of 6% per year. Find the value of the painting after 12 years.​

Answer 1

Answer:

$5,030

Step-by-step explanation:

Year 1 – $2,500 × 1.06

Year 2 – $2,500 × 1.06 × 1.06 = $2,500 × 1.06²

Year 3 – $2,500 × 1.06 × 1.06 × 1.06 = 1.06³

…

Year 12 – $2,500 × 1.06 × 1.06 × 1.06 × 1.06 × … = $2,500 ×  1.06^12 ≈ $2,500 ×  2.012

(so it doubles in value)

Value at end of year 12 = $2,500 × 1.06^12 = $2,500 × 2.012 ≈ $ 5,030