Question

4. Depreciation and Appreciation:
a. A holiday trailer depreciates in value approximately 10% per year. If your family
purchases a holiday trailer for $29,000.00 and they plan on selling in the 4th year,
what is the most that they could expect to sell it for?

b. In some housing markets, it is predicted that homes will continue to appreciate at 4% per year into the future. If you purchase a home for $435,500.00, what can you expect to sell it for after 11 years, if this appreciation percentage is correct?

Answer 1

Answer:

A - 17,400

B - 627,120

Step-by-step explanation:

A.) A house that has a value of $29,000 is being depreciated(value is being lowered) 10% each year for 4 years. So after 4 years is will be depreciated by 40%

40% of 29,000 is 11,600

29,000 - 11,600 = 17,400

B.) A house that has a value of $435,500 is being appreciated(value is being raised) by 4%. So in the next 11 years it will be appreciated by 44%.

44% of 435,500 is 191,620

435,500 + 191,620 = 627,120