Over the past few years, housing costs have increased at a rate of 6% per year. If this trend were to continue, how many years would it be before a house doubled in value? 18 years 6 years 12 years 9 years.

Over the past few years, housing costs have increased at a rate of 6% per year. If this trend were to continue, how many years would it be before a house doubled in value? 18 years 6 years 12 years 9 years.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14EA: How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one...

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Question

Over the past few years, housing costs have increased at a rate of 6% per year. If this trend were to continue, how many years would it be before a house doubled in value?

18 years

6 years

12 years

9 years.

Expert Solution

Step 1

Future Value refers to the compounded value of a single cash flow received today or multiple cash flows received at some equal interval of time, at a given growth rate for a specified period of time. It is an essential instrument for an investor as by finding the future value of an investment, they can determine or evaluate the worth of an investment or securities in the future and accordingly able to take an investment decision on basis of this.

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