Home values in a town have declined 7% per year for each of the past four years. What was the total percentage decrease in home in the four years?

Question

Home values in a town have declined 7% per year for each of the past four years. What was the total percentage decrease in home values during the four-year period. Round to the nearest percentage point.

Answer 1

A = a₀r_^t, where A = amount, a_o = initial amount, r = rate, t = time

 

A = a₀(0.93)⁴

A ≈ a₀(0.748052)

 

The decrease is 100% - 74.8052%, or 25.1948%

 

25% to the nearest % point.