Question

Toby, is looking to buy a house in Long Island. He has been following house prices now for a while. In March 2017, Toby noticed the average house price in his chosen district was $327,800, while in March 2001, the average price was $210,300.

  

How much did sales price increase over the time period that Toby was considering? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

  

Answer 1

We use the formula:  
A=P(1+r/100)^n
where   
A=future value
P=present value  
r=rate of interest
n=time period.

327,800=210,300*(1+r/100)^16

(327,800/210,300)^(1/16)=(1+r/100)

(1+r/100)=1.0281

r=1.0281-1

=2.81%(Approx)