A house worth £80,000 in January 2012 is set to decrease in value by 7% per year. What is the percentage decrease in value over the three years? Give your answer to one decimal place.

The percentage decrease in three years is -19.6%

Step-by-step explanation:

Here, given that we have a percentage decrease of 7% per year, we want to calculate the value of the percentage decrease in 3 years

Mathematically, the decrease amount can be modeled by the equation;

A = I ( 1 - r)^t

where A is the amount after a specific number of t years

I is the original worth which is 80,000

r is the percentage of decrease per year = 7% and is 7/100 = 0.07

t is the number of years = 3

The amount after 3 years will be;

A = 80,000(1 - 0.07)^3

A = 80,000(0.93)^3

= 64,348.56

Percentage decrease in value over 3 years will be;

(64,348.56 - 80,000)/80,000 * 100%

= -15,651.44/80,000 * 100% = -19.5643 %

The percentage decrease in three years is -19.6%

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