Question

A house has increased in value by 38% since it was purchased. If the current value is 483,000, what was the value when it was purchased?

Answer 1

The catch here is that you cannot find 38% of the current price and then subtract that off. That does not work.

Instead, you need to realize that if the purchase price has increased by 38%, then the current value is 138% of the original price.

You can set up the proportion

`(100)/(138) = (x)/(483000)`

which compares the purchase price to the current value, as percentages and as money values.

To solve, multiply both sides by 483000 to find that x = 350,000.

The purchase price was $350,000.