Question

A house was purchased for $450 000.

Three years later, the house was sold for 124% of its purchase price.
a) What was the selling price of the house?
b) Estimate to check your answer.
c) By how much did the value of the house increase over the three years?

Answer 1

a) The selling price of the house is $505,800. b) The estimate of the selling price is $558,000. c) The value of the house increased by $55,800 over three years.

Step-by-step explanation:

a) To find the selling price of the house, we need to calculate 124% of the purchase price.

Selling price = Purchase price + (124% of the Purchase price)

Selling price = $450,000 + (0.124 * $450,000)

Selling price = $450,000 + $55,800

Selling price = $505,800

Therefore, the selling price of the house is $505,800.

b) To estimate and check our answer, we can use the method of multiplying the purchase price by 1.24 (representing a 24% increase) to get an estimate of the selling price.

Estimate = Purchase price * 1.24

Estimate = $450,000 * 1.24

Estimate = $558,000

Since the estimate is close to our actual answer of $505,800, we can be confident in the accuracy of our calculations.

c) The value of the house increased by the selling price minus the purchase price.

Value increase = Selling price - Purchase price

Value increase = $505,800 - $450,000

Value increase = $55,800

Therefore, the value of the house increased by $55,800 over the three years.