A piece of artwork is valued at $2,000 and appreciates at a rate of 5% per year. What is the growth factor?
Options
A
0.05
B
1.05
C
0.95
D
2000
Answer & Analysis
Answer
B
Analysis
The growth factor represents the factor by
which the value of the artwork increases each year. Since the artwork
appreciates at a rate of 5% per year, it retains 100% of its value plus an
additional 5%.
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