Question

Assume that in January 2017, the average house price in a particular area was $308,700. In January 2000, the average price was $198,300. What was the annual increase in selling price?

Answer 1

2.64%

Step-by-step explanation:

It requires application of basic time value of money function

n = 17

FV = $308,700

PV = $198,300

FV = PV * (1 + r)n

$308,700 = $198,300 * (1 + r)^17

$308,700 / $198,300 = ($198,300 * (1 + r)^17) / $198,300

1.556732 = (1 + r)^17

Taking 17th root of equation

1.0264 = 1 + r

r = 2.64%