Question

Angelique is thinking about buying a house for $179,000. The table below shows the projected value of two different houses for three years. Number of years 1 2 3 House 1 (value in dollars) 186,160 193,606.40 201,350.66 House 2 (value in dollars) 190,000 201,000 212,000 Part A: What type of function, linear or exponential, can be used to describe the value of each of the houses after a fixed number of years? Explain your answer. (2 points) Part B: Write one function for each house to describe the value of the house f(x), in dollars, after x years. (4 points) Part C: Angelique wants to purchase a house that would have the greatest value in 30 years. Will there be any significant difference in the value of either house after 30 years? Explain your answer, and show the value of each house after 30 years. (4 points)

Answer 1

Answer:

Part A:

Linear function

Part B:

House 1; f(x) = 7595.3·x + 178515

House 2; f(x) = 11,000·x + 179000

Part C:

Yes, there will be a significance difference

The value of house 1 after 30 years is $406,374

The value of house 2 after 30 years is $509,000

Step-by-step explanation:

The given values are

               House 1

Year 1,    186,160

Year 2,   193606.40

Year 3,   201350.66

We see that the prices of the houses have a common difference given as follows;

201,350.66 - 193606.40 = 7744.26,

193,606.40 - 186,160 = 7446.4

Which is fairly constant giving a linear function of the house after a fixed number of years

               House 2

Year 1,    190,000

Year 2,   201,000

Year 3,   212,000

We see that the prices of the houses have a common difference given as follows;

212,000 - 201,000 = 11,000,

201,000 - 190,000 = 11,000

Which is fairly constant

Which is fairly constant giving a linear function of the house after a fixed number of years

Part B:

The function for the first house  is given by the regression formula from regression analysis

Y = a + b·X

Where:

$b = \dfrac{N\sum XY - \left (\sum X \right )\left (\sum Y \right )}{N\sum X^{2} - \left (\sum X \right )^{2}}$

$a = \dfrac{\sum Y - b\sum X}{N}$

X = Value of the house at Year Y

Y = The year

Which gives;

f(x) = 7595.3·x + 178515

The function for the first house  is given by the arithmetic progression also by regression analysis as follows;

f(x) = 11,000·x + 179000

Part C

The value of house 1 after 30 years = 7595.3×30 + 178515 = $406,374

The value of house 2 after 30 years = 11,000×30 + 179000 = $509,000

Yes, there will be a significance difference between house 2 and house 1 to about 509,000 - 406,374 = $102,626.