Question

. In the year 1985, a house was valued at $110,000. By the year 2005, the value had appreciated to $145,000. What was the annual growth rate between 1985 and 2005

Answer 1

Answer:

the annual growth rate between 1985 and 2005 is 1.38%

Explanation:

The computation of the annual growth rate between 1985 and 2005 is shown below:

Future value = Present value × e^(rate × time period)

$145,000 = $110,000 × e^(rate, 20)

$145,000 ÷ $110,000 = e^(rate, 20)

e^(rate, 20) = 1.318

Now take the log in both the sides

In(e^(rate, 20)) = ln(1.318)

r = ln(1.318) ÷ 20

= 1.38%

Hence, the annual growth rate between 1985 and 2005 is 1.38%