Question

Edward purchased his home for $89,000. For the first three years after he moved in, the real estate market was very lively, so his property value grew by 4.8% every year. For the next five years, the market slowed down somewhat, and his property value grew by 2.6% every year. How much had the value of Edward’s home increased after eight years, to the nearest hundred dollars?
a.
$25,700
b.
$27,500
c.
$30,000
d.
$13,200

Answer 1

Final value = 89,000*(1.048)^3*(1.026)^5.
(1.048)^3 ≈ 1.1510226 and (1.026)^5 ≈ 1.1369381, so multiplier ≈ 1.3086.
Final ≈ 89,000 * 1.3086 ≈ $116,465.
Increase ≈ 116,465 − 89,000 = $27,465 ≈ $27,500 to the nearest hundred.

Answer: b. $27,500