Chapter 2.2, Problem 92E

Finite Mathematics and Applied Cal...

7th Edition
Stefan Waner + 1 other
ISBN: 9781337274203

Chapter
Section

Finite Mathematics and Applied Cal...

7th Edition
Stefan Waner + 1 other
ISBN: 9781337274203
Textbook Problem

Home Prices The median selling price of an existing home in the United States increased continuously over the period 2011-2013 at the rate of 8.5% per year from approximately $166,000 in 2011.27 Write down a formula that predicts the median selling price of an existing home t years after 2011. Use your model to estimate, to the nearest$1,000, the median selling price of an existing home in 2013 and 2015.

To determine

To calculate: The formula that predicts the price of existing homes t years after 2011 and use the formula to predict the sales existing homes in 2013 and 2015 to the nearest $1000 if Price of existing homes in the United States rose over continuously at the rate of 8.5% per year from$166000 in 2011.

Explanation

Given Information:

The Price of existing homes in the United States rose over continuously at the rate of 8.5% per year from $166000 in 2011. Formula used: The formula for continuous growth is, A(t)=Pert Here, P is initial value, r is rate and t is time in year. Calculation: Convert the rate of interest in the decimal form. r=8.5%=8.5100r=0.085 The formula for continuous growth is, A(t)=Pert Substitute P=$166000, r=0.085 in the expression A(t)=Pert.

A(t)=$166000e0.085t Thus, the model that predicts the Price of existing house after 2011 is A(t)=$166000e0.085t

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