ShmoopTube

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And here's your shmoop du jour...

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The value of a rare work of art...

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okay, it's your baby sister's finger painting, but the bidders don't need to know that...

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is appreciating annually by about 15%.

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If the... masterpiece... will be worth $45,055 in five years, what is its worth now?

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Here are your potential answers...

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We want to find how much this work of art is worth today.

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To do that, we need the help of an equation.

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The equation basically reads:

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New cost equals original cost times one plus rate of appreciation raised to the number of years.

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Replace those words with our numbers and you get:

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$45,055 = V times the quantity 1 + 0.15 to the fifth power.

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For our purposes, V represents the original cost of the work.

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Now that we have our equation, all we have to do is solve for V.

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Divide both sides of the equation by 1.15 to the fifth...

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...to get that V equals around 22,400.

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(D) is the correct answer.

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