WEBVTT
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Noah and James want to sell their property.
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The property market is going down in their city and the expected properties’ value after 𝑚 months is given by the expression: 𝑃 equals the property value to start with multiplied by ninety five hundredths to the 𝑚 power.
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What is the percentage reduction in the property value per month?
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Let’s think about this.
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What they’re saying is that we will need to multiply the value of the property by .95 to the power of whatever month they sell it in.
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And we are looking for the percentage reduction.
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Let me ask you a question.
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What would the formula be if the market was not going downhill?
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That is to say, what would the formula be if they could get out of their house exactly what they put into it, no matter how many months they waited.
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You would multiply the property value by one every time, no matter how many months you waited.
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So let’s compare these two formulas.
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On the one hand, we have the formula if the market is not going down.
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And you multiply by one.
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On the other hand, we have .95.
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What is the reduction here?
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What is the percent reduction?
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If we take away the 95 hundredths from one, we’re left with five hundredths.
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And five hundredths in percentage form is five percent.
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The percent reduction for their home value is five percent.