You buy a 175,000-dollar house at a time in which the value of real estate is increasing by 3.7% ann

Eliaszowyr1

Eliaszowyr1

Answered question

2022-05-19

You buy a 175,000-dollar house at a time in which the value of real estate is increasing by 3.7% annually.
1) What was the value of the house two years before you bought it?
2) If the trend persisted and the house were properly maintained, how many years after purchase could the house be sold for a profit of 50,000 dollars?

Answer & Explanation

bluayu0y

bluayu0y

Beginner2022-05-20Added 11 answers

The present value of the house is: 175000 dollars
The value of house is increasing 3.7% annually.

1) The value of house two years before is:
= 175000 ( 1 3.7 100 ) 2
= 175000 ( 0.963 ) 2
162290 dollars

2) After t years the value of estate is increase by $50000. Thus,
175000 ( 1 + 3.7 100 ) t = 175000 + 50000
( 1 + 3.7 100 ) t = 225000 175000
( 1.037 ) t = 9 7
t 6.92 years
Thus, after 6.92 years the profit will be 50000 dollars

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