Answer:
(a) The median home price would have been approximately $1,716,921.02 in 2018 using 10.6% growth.
(b) The actual median home price is far less than the median home price calculated using 10% growth rate by $1,316,921.02.
Step-by-step explanation:
Note: This question is not complete as some data are omitted. The complete question is therefore given before answering the question as follows:
In 2000, the median home price in a certain city was about $280,000, and from 2000 to 2006, home prices in this city rose at an average rate of about 10.6% per year. If prices had continued to rise at that rate, what would the median home price have been in 2018? Compare to the actual median price of about $400,000 in 2018.
The explanation to the answer is now provided as follows:
(a) If prices had continued to rise at that rate, what would the median home price have been in 2018?
Note: See the attached excel file for the computation of the what would the median home price have been in 2018.
The following are given in the question:
Median home price in 2018 = $280,000
Annual growth rate = 10.6%
Therefore, the median home price would have been approximately $1,716,921.02 in 2018 using 10.6% growth.
(b) Compare to the actual median price of about $400,000 in 2018.
Amount the median price would have been = $1,716,921.02
Actual median price = $400,000
Difference = Amount the median price would have been - Actual median price = $1,716,921.02 - $400,000 = $1,316,921.02
Therefore, the actual median home price is far less than the median home price calculated using 10% growth rate by $1,316,921.02.
