Housing Prices and Property Taxes
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a) In 1970, an average house in Cupertino cost $41,000. 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?
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Step-by-step calculations are shown together with the formulas used. A screenshot of calculator work is provided.
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a)
Use the compound interest formula to find the price of the house in 1987.
The compound interest formula is:
A = P (1 + r) ^ t
Where
A = price of the house in 1987
P = price of the house in 1970 = 41,000
r = rate of ...
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