Question

The prices of houses in Tennessee have been on a steady incline for the last several years. If the average price of a house has increased by 8.5% over the last year to $135,000, what was the average price of a house last year?

Answer 1

The average price of a house last year was = $124,423.96

Explanation:

Let the average price of houses in Tennessee last year in dollars be =
`x`

This year the increase percentage in average price was = 8.5%

The change in average price can be calculated in dollars as:

⇒
`8.5\%\ of\ \textrm{Last year average price}`

⇒
`0.085* x`

⇒
`0.085x`

New increased average price in dollars can be calculated as:

`\textrm{Last year average price + Increase in average price}`

⇒
`x+0.085x`

⇒
`1.085x`

The new increased average price actually is = $135,000

So, we have,

`1.085x=135000`

Dividing both sides by 1.085

`(1.085x)/(1.085)=(135000)/(1.085)`

∴
`x=124423.96`

Thus average price of a house last year was = $124,423.96