In 2000, the median home price in a certain city was about $, and from 2000 to 2006, home prices in this city rose at an average rate of about % per year. If prices had continued to rise at that rate, what would the median home price have been in ? Compare to the actual median price of about $400,000 in .

(a) The median home price would have been approximately $1,716,921.02 in 2018 using 10.6% growth.

(b) The actual median home price is far less than the median home price calculated using 10% growth rate by $1,316,921.02.

Step-by-step explanation:

Note: This question is not complete as some data are omitted. The complete question is therefore given before answering the question as follows:

In 2000, the median home price in a certain city was about $280,000, and from 2000 to 2006, home prices in this city rose at an average rate of about 10.6% per year. If prices had continued to rise at that rate, what would the median home price have been in 2018? Compare to the actual median price of about $400,000 in 2018.

The explanation to the answer is now provided as follows:

(a) If prices had continued to rise at that rate, what would the median home price have been in 2018?

Note: See the attached excel file for the computation of the what would the median home price have been in 2018.

The following are given in the question:

Median home price in 2018 = $280,000

Annual growth rate = 10.6%

Therefore, the median home price would have been approximately $1,716,921.02 in 2018 using 10.6% growth.

(b) Compare to the actual median price of about $400,000 in 2018.

Amount the median price would have been = $1,716,921.02

Actual median price = $400,000

Difference = Amount the median price would have been - Actual median price = $1,716,921.02 - $400,000 = $1,316,921.02

Therefore, the actual median home price is far less than the median home price calculated using 10% growth rate by $1,316,921.02.

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