Two people purchased a home for $360,000. They added a $30,000 pool and patio complex. Five years later, they sold the home for $500,000. What was their annual average rate of appreciation above their cost?

Question

Quizplus · Accepted Answer

The total cost of the home including the pool and patio is $390,000 ($360,000 + $30,000). The appreciation amount is $110,000 ($500,000 - $390,000). Over five years, the annual average rate of appreciation is ($110,000 / $390,000) / 5 = 0.0564 or 5.6%.

Two People Purchased a Home for $360,000