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Math130

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Because of a recession, the value of a new house depreciated 10% each year for three years in a row. Then, for the next three years, the value of the house increased 10% each year. Did the value of the house increase, decrease, or remain the same after 6 years?

  • Math130 -

    it decreased the first three years, then increased the next three years. so basically its like it remained the same

  • Math130 -

    Not quite
    Decreasing for 3 years at 10%/yr, the value is now .9^3 = .729

    Increasing for 3 years from the reduced value, it is finally worth

    .729*1.1^3 = .970

    SO, the house lost 3% over the 6 years.

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