Question

A property sells for $620,000 two years after it was purchased. If the annual appreciation rate was 4%, how much did the original buyer pay for the property (round to the nearest $1,000)?

Answer 1

$25,000 is the answer you would take $620,000 x 0.04 (4%)= 24,800 which rounds to 25,000

Answer 2

Answer:

$574,000

Step-by-step explanation:

To solve this problem you just have to first state how much in percentage of the first place does the final price represents, if the problem tells you that the house is sold 2 years after it was purchased, and it appreciated at a rate of 4% annually, this means that it appreciated 8%, so the total price is actually 108% of the original price, now that we now this we just do a simple rule of three:

$\frac{620,000}{108}\frac{x}{100}$

If you clear the rule of three you get:

$x=\frac{(620,000)(100)}{108}$

$x=574,074.074$

Since they ask you to round it to the nearest thousand it´d be $574,000