Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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 You are considering the purchase of a property today for $300,000. You plan to finance it with an 80 percent loan. The appreciation rate on the property value is expected to be 4 percent annually for the next three years.

a. Calculate the expected average annual appreciation in home equity (EAHE).
b. Approximate the expected annual average rate of appreciation on home equity for the
next 3 years.
c. What if you now think that a $300,000 purchase price may be somewhat high and that
if you pay this price, the expected appreciation rates in your house price will be as
follows: year 1= 0%, year 2= 2%, year 3= 3%. How will your answers to parts (a) and
(b) change? 

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