This question is testing your understanding of multipliers.

In the first year

Since the house value depreciated by 5% the multiplier we use is:

100% - 5% = 95% = 0.95

So we multiply £235,000 by 0.95 which gives us:

£223,250.

Let’s move on to the second year:

Since the house value increases now, our multiplier is:

100% + 7% = 107% = 1.07

so we multiply the current house value which is £223,2... more

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