A house purchased 7 years ago for $200000 was just sold for $429999 . Assuming exponential growth, approximate the annual growth rate, to the nearest tenth of a percent .

Answer 1

For this problem we'll need the growth percentage formula:

((X_f/X_i)^1/y-1)*100 = Annual Growth Rate

If we plug in the values, we calculate:

((429999/200000)^1/7-1)*100 = 11.556

So your answer is 11.6% after rounding to the nearest tenth.

Answer 2

Hi

I assume that the price P(t)=P₀e^kt where P₀ is the purchase price P(t) is the price at time t and k is the annual growth rate.

We L=know P₀ = $200,000, P(7)=$429,999, t=7 want to solve for k

k= ln(P(7)/P₀)/t=.109/ty which is 10.9%/yr compounded continuously or 11.55% annual rate.

Jim