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Sagot :
If Tammy sell her house at the future value 13 years later, she will gain profit of $103,800 (D).
Future value is the value of acurrent asset based on an assume rate of growth in the future. Future value is crucial in deciding how much an investment made today will be worthy in the future.
Future value can help an investor to estimate his future profit from an investment he made in the current time. An investor will gain profit if the future value of his investment is higher than its present value.
Future value can be calculated based on the present value of an asset. Future value can be fomulated as:
FV = PV (1+r)ⁿ
where:
PV = present value of an asset
r = the estimated gworth rate
n = number of years
From the case, we know that the present value of Tammy's is $184,000 and the expected growht rate is 3.5%. Hence, we could summarized that:
PV = $184.000
r = 3.5%
n = 13 years
Hence, the future value of Tammy's house is:
FV = PV (1+r)ⁿ
FV = $184,000 (1+3.5%)¹³
FV = $287,767
The profit Tammy could make if she sell her house after 13 years is:
π = FV - PV
π = $287,767 - $183,000
π = $103,767
π ≈$103,800
Leanr more about Future Value and Present Value here: https://brainly.com/question/14860893
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