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The home that you purchased in 2004 steadily increased in value for the first four years at the annual rate of 5.3%. Then, the home steadily decreased in value for the next three years at the annual rate of 3.4%. If you originally purchased the home for $160,000, what is its value today?

  • Math -

    Now, calculate this for each of the years. First, convert the percent to a decimal:


    So, multiply 160,000 by .053 and then add that result to 160,000. Do this four times.

    Now, take this end value, and multiply it by .034 and subtract this result from the end value. Do this 3 times. You will have the value for today!

    Hope this helps!

  • Math -

    value after 4 years of appreciation = 160000(1.053)^4

    value of that amount after 3 more years of depreciation = 160000(1.053)^4 (.966)^3
    = 177322.91

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