Real Estate Math
A Minnesota investor plans to buy a property for $280,000 and expects it to appreciate 4% per year. What will the estimated value be in 3 years?
A$308,000
B$314,829✓ Correct
C$313,600
D$336,000
Explanation
Year 1: $280,000 x 1.04 = $291,200. Year 2: $291,200 x 1.04 = $302,848. Year 3: $302,848 x 1.04 = $314,962 (approximately $314,829 using compound appreciation). Compound appreciation is more accurate than simple appreciation over multiple years. Minnesota real estate has historically appreciated at moderate rates over the long term.
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