let 1985 correspond with t = 0
then 2005 ---> t = 20
If we assume that the growth is continuous,
110000 e^20r = 140000
e^20r = 1.2727...
take ln of both sides, and use log rules
20r = ln (1.2727...) = .241162...
r = .0112058..
or appr 1.12%
so you would have
Value = 110000 e(.0112058..*t)
since 2010 ----> t = 25
sub in t = 25 and evaluate.
Let me know what you got.
If you wanted the rate just compounded annually, then solve
110000(1+r)^20 = 140000
you should get r = .01213
In the year 1985, a house was valued at $110,000. By the year 2005, the value had appreciated exponentially to $140,000.
1. What was the annual growth rate between 1985 and 2005?Round your answer to two decimal places.)
2. Assume that the value continued to grow by the same percentage. What was the value of the house in the year 2010? Round your answer to the nearest dollar.)
1 answer