4) In 1970, an average house in Cupertino cost $41,000. a ) If the average house...

4) In 1970, an average house in Cupertino cost $41,000.

a ) If the average house appreciates in value at 3.3% annually for the past 18 years, what is the price of that house in 1987?

b) Suppose that your property tax was $250 and has increased by 3.5% annually, how much property tax would you have paid over the last 18 years for the house.

5) Suppose further that your maintenance expense during the first year was $200 and has increased steadily by 2.5% annually, prepare a table (Using MS-Excel), that shows, by year, the value of your house, the annual maintenance expense and your property tax and then your profit, if you sell the house in 1987. Assume that the annual change in property tax is determined at the end of the year and then spread through the following year.

Solutions

Expert Solution

1. Price of the house in 1987 = $71,201.53

2. Property Tax for last 18 years = $6,124.92

3. Profit from sale = $60,599.34

jeff jeffy answered 1 year ago

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