value of a home is $191,000. What was the original cost if it depreciated 5% per year for the last 7 years?

Question

Im taking a real estate class and i need help with the math formulas.

Answer 1

The answer to this can be found by finding P in the following equation:  A = P(1-r)^t, where A is the current value, P is the original value, r is the decimal rate change, and t is the number of years.

 

P = A / (1 - r)^t  -->  P = 191000 / (1 - 0.05)⁷  -->  P = 191000 / 0.95⁷  -->  P = 191000 / 0.6983373  = $273506.80

 

check:  A = 273506.80(.95⁷) = 191000  check!