Juma bought a house 4 years ago for Ksh 2 500 000. The value of the house rose steadily over 4 years to its current value of Ksh 3 700 000.Calculate, correct to 2 decimal places, the annual rate of appreciation in the value of the house.
To calculate the annual rate of appreciation, we can use the formula:
Annual Rate of Appreciation = [(Final Value - Initial Value) / Initial Value] / Number of Years
Plugging in the values:
Initial Value = Ksh 2,500,000
Final Value = Ksh 3,700,000
Number of Years = 4
Annual Rate of Appreciation = [(3,700,000 - 2,500,000) / 2,500,000] / 4
= (1,200,000 / 2,500,000) / 4
= 0.48 / 4
= 0.12
So, the annual rate of appreciation in the value of the house is 0.12 or 12%.