If property in your neighborhood is increasing in value at a rate of 8% annually, what is the current value of a home bought for $115,900 one year ago?

To determine the current value of a home that was purchased for $115,900 one year ago, with an annual appreciation rate of 8%, you can use the formula for calculating future value based on appreciation. This formula is:

Future Value = Present Value x (1 + Rate) ^ Time

In this case, the Present Value is $115,900, the Rate is 8% (or 0.08), and the Time is 1 year. Plugging these values into the formula gives you:

Future Value = $115,900 x (1 + 0.08) ^ 1

Future Value = $115,900 x 1.08

Future Value = $125,172

This calculation reveals that after one year, the value of the home increased to $125,172, which corresponds correctly to the first choice. This method of applying the appreciation rate helps in accurately determining how much a property has appreciated over time based on its original purchase price.