Question

The initial value of a home is $200,000. The value of

the home will increase at a rate of 6% each year.
Which graph best models this situation?

Answer 1

Graph A

Explanation:

The value of the house, V after x years is modeled by the exponential equation

V = 200000(1.06)ˣ

We can eliminate graphs B and C since the rise is too extreme for a 6% increase in base price

We can eliminate graph D since the graph starts at 100,000 and not 200,000. Even after 5 years, the graph shows the price to be less than 200,000 which is not possible for a rate increase.

That leaves us with Graph A

We can double-check:

After 5 years the value would be 200, 000 x 1.06⁵ ≈ $267,645

After 10 years the value would be 200, 000 x 1.06¹⁰ = $358,170

Graph A models these values.

Hence Graph A models the situation