Question

Five years ago, a house was purchased for 123,500. This year it was appraised at 185,000.

Question: Find the average rate of change. Then use it to estimate the value of the house in 7 years.

Answer 1

The average rate of change is the "change in value over the change in time."

`(185000-123500)/(5) = (61500)/(5) = 12300`

The house has increased in value at an average rate of $12,300/year.

Assuming the same rate of change, in seven years the value will increase by 7x12300:

`185000 + 7(12300) = 185000+ 86100 = 271100`

The house should be worth about $271,100 in seven year from now.