emilyradkinson
contestada

The Mendes family bought a new house 8 years ago for $126,000. The house is now worth $156,000. Assuming a steady rate of growth, what was the yearly rate of appreciation? Round your answer to the nearest tenth of a percent (1.2% etc)

Respuesta :

mathmate
Rate of appreciation is based on an exponential function, i.e.
if r=rate of appreciation, after n years, the new value is
F=P(1+r)^n.
P=present worth
F=future worth.

Here, 
P=126000
F=156000
n=8
so
156000=126000(1+r)^8
=>
(1+r)^8=(156000/126000)=26/21
=>
(1+r)=(26/21)^(1/8)=1.02706 (approx.)
=>
r=1.02706-1=0.02706, or 
rate of appreciation is approximately 2.7%

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