Question

The value of a house increases by 20% each year.

It is valued at $20000 today.
a) What will it be worth in two years' time?
b)What was it worth one year ago?

Answer 1

a. $28,800

b. $16,000

Explanation:

A.

20,000 * 20% = 4,000

so thats how much more it will be next year

add that together

20,000 + 4,000 = 24,000

so thats one year from now and we have to find two

multiply 20% times next years value

24,000 * 20% = 4,800

so add that to 24,000

24,000 + 4,800 = 28,800

so in two years the value will be $28,800

B.

20,000 * 20% = 4,000

so thats how much less it was worth one year ago

so you have to subtract it

20,000 - 4,000 = 16,000

so it was worth $16,000 one year ago