Question

Suppose the homes in Arizona have appreciated an average of 8% per year in the last years.

If the average home in a suburb sold for 225000 in 2019, create a model for the home prices in the suburb.

How much would this home be worth in 2030

Answer 1

`V = P(1+(8)/(100) )^(t)`

V = 524618.77

Explanation:

If the homes in Arizona have appreciated an average of 8% per year rate in the last year,

If the average home in a suburb sold for 225000 in 2019, then after t years since 2019, the value will be
`V = 225000(1+(8)/(100) )^(t)`

Therefore, the equation of model is
`V = P(1+(8)/(100) )^(t)`. (Answer)

Now, in the year 2030, t will become (2030 - 2019) = 11 years,

`V = 225000(1+(8)/(100) )^(11)`

⇒ V = 524618.77 (Answer)