Buying your own home is often mentioned as "the best investment you can make." In 1930, the average home sale price was $3,845. By 1990, that figure had risen to $123,000. What was the average annual rate of change in the price of houses over this time period?
A) 3.42% per year
B) 5.95% per year
C) 10.12% per year
D) 12.36% per year

Question

Quizplus · Accepted Answer

To calculate the average annual rate of change, we can use the formula:
[(Ending value/Beginning value)^(1/number of years)] - 1
Using this formula, we get:
[(123000/3845)^(1/60)] - 1 = 0.0595 or 5.95%
Therefore, the correct answer is B, with an average annual rate of change of 5.95%.

Buying Your Own Home Is Often Mentioned as "The Best