Thread: 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"?

Originally Posted by magentarita

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:

So we need to solve for p:

Which means that:

So the ring use to be $2,315.97

Thanks a million!