Larry bought a house for $220,000.
After one year, its value appreciated (increased in value) by 15%.
During the second year, its value depreciated (decreased in value) by 12% from its value at the end of the first year.
What was the value of the house at the end of the second year?
220,000 * 1.15 = 253,000
253,000 * 0.88 = 222,640
222,640
To find the value of the house at the end of the second year, we need to understand the calculations involved in appreciation and depreciation.
First, let's calculate the appreciation of the house's value after one year.
To do this, we take the original value of the house ($220,000) and multiply it by the appreciation rate, which is 15% expressed as a decimal (0.15):
Appreciation = $220,000 * 0.15 = $33,000
Therefore, after one year, the value of the house increased by $33,000.
Now, let's calculate the value of the house at the end of the first year:
Value at the end of the first year = Original value + Appreciation
Value at the end of the first year = $220,000 + $33,000 = $253,000
Now, let's calculate the depreciation of the house's value during the second year.
To do this, we take the value of the house at the end of the first year ($253,000) and multiply it by the depreciation rate, which is 12% expressed as a decimal (0.12):
Depreciation = $253,000 * 0.12 = $30,360
Therefore, during the second year, the value of the house decreased by $30,360.
Finally, let's calculate the value of the house at the end of the second year:
Value at the end of the second year = Value at the end of the first year - Depreciation
Value at the end of the second year = $253,000 - $30,360 = $222,640
Therefore, the value of the house at the end of the second year is $222,640.