Answer:
The growth rate for each month is [tex]\frac{10}{12}\%[/tex] or 0.833%.
Step-by-step explanation:
It is given that the initial cost of house is $120,000.
The value of the house increases by 10% each year.
It means the growth rate is 10% per year.
The growth model is defined as
[tex]P=P_0(1+r)^t[/tex]
Where, P₀ is initial value, r is growth rate and t is time.
The growth model for given problem is
[tex]P=120000(1+0.1)^t[/tex]
We know that
[tex]1\text{ year}=12\text{ months}[/tex]
[tex]1\text{ year}=10\%[/tex]
[tex]12\text{ months}=10\%[/tex]
[tex]1\text{ months}=\frac{10}{12}\%[/tex]
[tex]1\text{ months}=0.833\%[/tex]
[tex]120,000\times \frac{10}{12}\times \frac{1}{100}=1000[/tex]
The value of house increased by $1000 per month.
Therefore growth rate for each month is [tex]\frac{10}{12}\%[/tex] or 0.833%.
