Appreciation and depreciation

• What is appreciation in the context of value over time?


  Appreciation refers to when the value of something increases over time.
• How does the value of a house typically change over time?

  The value of a house usually increases with time.
• If a flat was bought for £74,000 in 2008 and appreciated by 1.5% each year, what is the multiplier used for this appreciation?

  The multiplier is 1.015.
• How do you calculate the value of the flat after four years of appreciation?

  You multiply £74,000 by the multiplier raised to the power of 4, which is $(1.015)^4 \times 74000$.
• What is the final value of the flat after four years of appreciation?

  The value of the flat after four years is £78,540.90.
• What are the methods to calculate appreciation?

  • Use the multiplier method.
  • Calculate the percentage increase and add it repeatedly.
• What is the percentage increase used in the appreciation example?

  The percentage increase used is 1.5%.
• What is the formula for calculating appreciation using the multiplier method?

  The formula is $Value =$$Initial \, Value \times (1 + \text{Percentage Increase})^{\text{Number of Years}}$.
• What are the differences between appreciation and depreciation?

  • Appreciation: Value increases over time.
  • Depreciation: Value decreases over time.
• What is the significance of the multiplier method in financial calculations?

  • It simplifies the calculation of appreciation and depreciation.
  • It allows for easy computation over multiple periods.