Question

Ten years ago, Mr. and Mrs. Boyce bought a house for $96000. Their home is now worth $125000. Assuming a steady rate of growth, what was the annual rate of appreciation?

Answer 1

2.67% per year

Explanation:

If g is the growth factor, its value can be found from the equation ...

125000 = 96000·g^10

Dividing by 96000 and taking the 10th root, we get

125000/96000 = g^10

(125/96)^(1/10) = g ≈ 1.026748

The growth rate is this value minus 1, expressed as a percentage:

(g-1)×100% ≈ 2.67% . . . . per year