2
QuizMultiple Choice

Real Estate Investments

Question 2 • 26-27 Ignite Financial Literacy Personal Finance - EL3403

Edward purchased his home for $89,000. For the first three years after he moved in, the real estate market was very lively, so his property value grew by 4.8% every year. For the next five years, the market slowed down somewhat, and his property value grew by 2.6% every year. How much had the value of Edward’s home increased after eight years, to the nearest hundred dollars?

Answer
A
$25,700
B
$27,500
C
$30,000
D
$13,200

Explanation

Apply each annual growth rate to the home’s value, compounding year by year: $89,000 × 1.048³ × 1.026⁵ ≈ $116,500. The increase is about $116,500 − $89,000 = $27,500, to the nearest hundred dollars. The correct choice is $27,500.

AI-written and checked against the verified answer.

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