Real Estate Math
An investor purchased a property for $400,000 five years ago and sells it for $520,000. The annual appreciation rate is approximately:
A5%✓ Correct
B6%
C5.5%
D7%
Explanation
Total increase = $120,000. Average annual appreciation ≈ $120,000 ÷ ($400,000 × 5) = $120,000 ÷ $2,000,000 = 6%. More precisely using compound: 1.06^5 ≈ 1.338, giving ≈ 5.4% compounded. Closest simplified answer is 5%.
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