Please answer with explanation.I will really upvote. Thanks A couple purchases a home in 1995 for $45,000 andfinds that today in 2017 it is worth $95,000. Theyconsider this a very good investment of their moneysince they more than doubled their money. Are thecorrect? What rate did they earn compoundedannually?Explain how you calculated this and why you thinkthey are correct/incorrect.(Consider that inflation averages about 3% a yearwhen deciding if this is a good investment or not. Also,to make the calculation less complicated, assume thatthe date of purchase in 1995 was about the same dateas today's date - i.e, no need to consider partialyears.)

A couple purchases a home in 1995 for $45,000 and finds that today in 2017 it is worth $95,000. They consider this a very good investment of their money since they more than doubled their money. Are the correct? What rate did they earn compounded annually?

A couple purchases a home in 1995 for $45,000 and finds that today in 2017 it is worth $95,000. They consider this a very good investment of their money since they more than doubled their money. Are the correct? What rate did they earn compounded annually?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter16: Real Estate And High-risk Investments

Section: Chapter Questions

Problem 2FPC

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Question

Please answer with explanation.

I will really upvote. Thanks

A couple purchases a home in 1995 for $45,000 and
finds that today in 2017 it is worth $95,000. They
consider this a very good investment of their money
since they more than doubled their money. Are the
correct? What rate did they earn compounded
annually?
Explain how you calculated this and why you think
they are correct/incorrect.
(Consider that inflation averages about 3% a year
when deciding if this is a good investment or not. Also,
to make the calculation less complicated, assume that
the date of purchase in 1995 was about the same date
as today's date - i.e, no need to consider partial
years.)

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