SOLUTION: I need help with a story problem. A diamond is purchased for $2500. Suppose it increases 5% in value each year. Find the value after 8 years. Thanks.

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Question 78408: I need help with a story problem.
A diamond is purchased for $2500. Suppose it increases 5% in value each year. Find the value after 8 years.

Thanks.
Found 2 solutions by stanbon, dolly:
Answer by stanbon(75887) About Me  (Show Source):
You can put this solution on YOUR website!
A diamond is purchased for $2500. Suppose it increases 5% in value each year. Find the value after 8 years.
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Each year its value is multiplied by (1 + 0.05) = value + 5%(value)
2500(1.05)^8 = $3693.64
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Cheers,
Stan H.

Answer by dolly(163) About Me  (Show Source):
You can put this solution on YOUR website!
Value of the diamond = $2500
Increases by 5% each year.
Value after 8 years = 2500(1 + 0.05)^8
= 2500(1.05)^8
= 2500(1.48)
= 3700
The diamond is worth $3700 after 8 years