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Math Help - Find Value of Ring

  1. #1
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    Find Value of Ring

    Tanya has just inherited a diamond ring appraised at $5000. If diamonds have appreciated in value at an annual rate of 8%, what was the value of the ring 10 years ago when the ring was purchased?

    NOTE: What does it mean, in this question, that diamonds have "appreciated in value"?

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  2. #2
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    Quote Originally Posted by magentarita View Post
    Tanya has just inherited a diamond ring appraised at $5000. If diamonds have appreciated in value at an annual rate of 8%, what was the value of the ring 10 years ago when the ring was purchased?

    NOTE: What does it mean, in this question, that diamonds have "appreciated in value"?
    It means grown. So it's grown in value at 8%

    So we've got: p\cdot 1.08^{10} = 5000

    So we need to solve for p: p = \frac{5000}{1.08^{10}}

    Which means that: p = 2 315.96744

    So the ring use to be $2,315.97
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  3. #3
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    Thanks..

    Thanks a million!
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