A multinational engineering consulting firm that wants to provide resort accommodations to spe­cial clients is considering the purchase of a three-bedroom lodge in upper Montana that will cost $250,000. The property in that area is rapidly ap­preciating in value because people anxious to get away from urban developments are bidding up the prices. If the company spends an average of $500 per month for utilities and the investment increases at a rate of 0.75% per month, how long would it be before the company could sell the property for $100,000 more than it has invested in it?

What will be an ideal response?


–250,000 – 500np + 250,000(1 + 0.0075)^np = 100,000

Try n = 50: 88,239 < 100,000
Try n = 60: 111,420 > 100,000

np = 55.1 months or 4.6 years

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