A property sells for $140,000 two years after it was purchased. If the annual appreciation rate is 6%, how much did the original buyer pay for it?
3 answers
x * 1.06^2 = 140000
$140,000 x 0.06 = $8,400
$140,000 - $8,400 = $131,600
$131,600 x 0.06 = $7,896
$131,600 - $7,896 = $123,704
$123,704 Original Sale Price
$140,000 - $8,400 = $131,600
$131,600 x 0.06 = $7,896
$131,600 - $7,896 = $123,704
$123,704 Original Sale Price
1.06 (represents the value plus 6 percent for one year)* 1.06 (second year value= 1.1236
140,000/1.1236= 124600
140,000/1.1236= 124600