Real Estate Math

A property appreciates from $180,000 to $225,000 in 5 years. What is the compound annual growth rate (CAGR)? (Approximate answer)

A3.5%
B4.6%✓ Correct
C5.0%
D6.0%

Explanation

CAGR = (End Value/Start Value)^(1/years) − 1 = ($225,000/$180,000)^(1/5) − 1 = (1.25)^0.

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