The median house price in Pickering Region increased by 5.8% from Jan 1, 2019 to Jan 1, 2021. A home was purchased in Pickering Region on Jan 1, 2019 for $600,000.

a)Assume this trend continues, write an exponential equation that models the Resale Value of this home over time.
b) At this rate, determine the date when the resale price of the home would reach $1 million (Show your work to accurate to the nearest month)
c) Use your exponential equation to determine the expected resale value of the home on April 1, 2020.

Answer :

Using an exponential function, we have that:

a) The equation is: [tex]A(t) = 600000(1.058)^{\frac{t}{2}}[/tex].

b) The house will have a value of $1 million during the year of 2037.

c) The expected value on April 1, 2020, is of $621,520.

What is an exponential function?

An increasing exponential function is modeled by:

[tex]A(t) = A(0)(1 + r)^t[/tex]

In which:

  • A(0) is the initial value.
  • r is the growth rate, as a decimal.

In this problem, the parameters are given as follows:

A(0) = 600000, r = 0.058 each 2 years.

Hence the exponential function is:

[tex]A(t) = 600000(1 + 0.058)^{\frac{t}{2}}[/tex]

[tex]A(t) = 600000(1.058)^{\frac{t}{2}}[/tex]

Item b:

It is the year 2019 + t, for which A(t) = 1000000, hence:

[tex]A(t) = 600000(1.058)^{\frac{t}{2}}[/tex]

[tex]1000000 = 600000(1.058)^{0.5t}[/tex]

[tex](1.058)^{0.5t} = 1.6667[/tex]

[tex]\log{(1.058)^{0.5t}} = \log{1.6667}[/tex]

[tex]0.5t\log{1.058} = \log{1.6667}[/tex]

[tex]t = \frac{\log{1.6667}}{0.5\log{1.058}}[/tex]

[tex]t = 18.12[/tex]

The house will have a value of $1 million during the year of 2037.

Item c:

April 1, 2020 is one year and 3 months = 1.25 years after January 1, 2019, hence the value of the home will be given by:

[tex]A(t) = 600000(1.058)^{\frac{t}{2}}[/tex]

[tex]A(1.25) = 600000(1.058)^{\frac{1.25}{2}}[/tex]

A(1.25) = $621,520.

More can be learned about exponential functions at https://brainly.com/question/25537936

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