Question

The value of homes in Baltimore, Maryland is dropping by 2.5% each month. If a house

costs $215,000 now, how much is it expected to be worth in 6 months

Answer 1

The house will be worth $184,699.6847 in 6 months.

Explanation:

Since the cost of the houses is dropping by 2.5 % per month, then it is decreasing exponentially and can be modeled by the following formula:

`cost(x) = 215000*(1 - (2.5)/(100))^t\\cost(x) = 215000*(1 - 0.025)^t\\cost(x) = 215000*(0.975)^t\\`

After 6 months:

`cost(6) = 215000*(0.975)^6\\cost(6) = 184699.6847`

The house will be worth $184,699.6847 in 6 months.