Calculating Real Capital Gain on a Property
An investor bought a house for $300,000. Several years later, they sold it for $500,000. During this period, the general price level, as measured by a consumer price index, rose from 120 to 180. Calculate the real capital gain on the house, expressed in the currency's value from the year of purchase. Show your main calculation steps.
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Related
Evaluating a Long-Term Housing Investment
An individual purchased a house in Year 1 for $250,000 and sold it ten years later for $400,000. The general price index was 150 in Year 1 and 225 ten years later. What was the real capital gain on this housing investment, expressed in Year 1 dollars?
Calculating Real Capital Gain on a Property
An investor bought a house for $300,000 and sold it 15 years later for $450,000. During this period, the overall price level in the economy increased by 50%. The investor correctly concluded that they realized a real capital gain on the property.