Real Estate Math
An Indiana home appreciates from $220,000 to $264,000 over 3 years. What is the average annual appreciation rate?
A5.4%
B6.3%✓ Correct
C6.7%
D7.0%
Explanation
Total appreciation = ($264,000 − $220,000) ÷ $220,000 = 20%. Average annual rate ≈ 20% ÷ 3 = 6.67% ≈ 6.7%. Using CAGR: (264/220)^(1/3) − 1 = 1.06266 − 1 = 6.27% ≈ 6.3%.
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