Answer:
The value of small parcel of lot in 2020 will be $103680.
Solution:
Given, A small parcel of lot in a rural area costs $50,000 in 1980.
The value of the lot appreciates by 20% every 10 years,
We have to find how much would the lot be in 2020?
According to given information,
cost of lot in 1990 → lot cost in 1980 + appreciated cost = 50000 + 20% of 50000
→ cost of lot in 1990 = 50000 + 20/100 x 50000 = 50000 + 1/5 x 50000 = 50000 + 10000 = $60000.
Now, cost of lot in 2000 → lot cost in 1990 + appreciated cost = 60000 + 20% of 60000
→ cost of lot in 2000 = 60000 + 20/100 x 60000 = 60000 + 1/5 x 60000 = 60000 + 12000 = $72000.
Now, cost of lot in 2010 → lot cost in 2000 + appreciated cost = 72000 + 20% of 72000
→ cost of lot in 2010 = 72000 + 20/100 x 72000 = 72000 + 1/5 x 72000 = 72000 + 14400 = $86400.
Now, cost of lot in 2020 → lot cost in 2010 + appreciated cost = 86400 + 20% of 86400
→ cost of lot in 2020 = 86400 + 20/100 x 86400 = 86400 + 1/5 x 86400 = 86400 + 17280 = $103680.
Hence, the value of lot in 2020 will be $103680.
