Question

In 1975 the price of a new house was $51,870. In 2020 the price of a new house is $198,817. How much has the price of housing increased on average per year over the time period in percentage terms? State your answer to two decimal places (e.g., 4.76)

Answer 1

Future Value:
FV = PV (1+r)^n
Where r is Int rate per period
n - No. of periods

Particulars	Amount
Present Value	$     51,870.00
Future Value	$ 1,98,817.00
Periods	45

Future Value = Cash Flow * ( 1 + r )^n
$ 198817 = $ 51870 ( 1 + r ) ^ 45
( 1 + r ) ^ 45 = $198817 / $51870
( 1 + r ) ^ 45 = 3.833
( 1 + r ) = 3.833 ^ ( 1 / 45 )
( 1 + r ) = 1.0303
r = 1.0303 - 1
r = 0.0303 i.e 3.03 %
Value of House increased by 3.03% per anum.