Question

A house cost $120,000 when it was purchased. The value of the house increases by 10% each year. Find the rate of growth each month and select the correct answer below.

Answer 1

Well, the house is increasing by 10% each year, so whatever the current price is, the new price is THAT plus 10%, well, since THAT is 100%, shouldn't that be 100% + 10%, or 110%?

$\bf \qquad \textit{Amount for Exponential Growth}\\\\ A=I(1 + r)^t\qquad \begin{cases} A=\textit{accumulated amount}\\ I=\textit{initial amount}\to &120,000\\ r=rate\to 10\%\to \frac{10}{100}\to &0.10\\ t=\textit{elapsed time}\\ \end{cases} \\\\\\ A=120000(1+0.10)^t\implies \begin{array}{lclll} A=120000(&1.1&)^t\\ &\uparrow \\ &rate\\ &of\\ &growth \end{array}$

1.1 is the decimal format, but you can simply multiply it by 100 to get the percentage, 1.1 * 100 = 110%