What is the exam-ready answer?
| Official syllabus topic | Valuation and Real Estate Calculations: appreciation, depreciation, and percentage relationships |
|---|---|
| Official PSI area | Real Estate Calculations |
| Published weight | 7% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual calculation. Follow the stated facts, units, time basis, and rounding instruction.
Formula and variables
| Symbol or term | Meaning |
|---|---|
| Original value | The starting amount and denominator for percentage change |
| New value | The amount after the stated increase or decrease |
| Change | New value minus original value, positive for gain and negative for loss |
Step-by-step method
- Identify the original value before calculating any percentage.
- Find the dollar change by subtracting original from new when both are given.
- Divide the change by the original value to find the percentage change.
- For a new value, multiply the original by one plus the rate for appreciation or one minus the rate for depreciation.
- Apply the factor repeatedly only if the question clearly describes compounding over multiple periods.
Georgia-specific distinction
Worked examples
Example 1: Find appreciation percentage
Scenario. A property rises from $280,000 to $322,000.
- Change = $322,000 - $280,000 = $42,000.
- Percent change = $42,000 / $280,000 = 0.15.
- 0.15 = 15%.
Answer. The property appreciated 15%.
Reasonableness check. Ten percent is $28,000 and five percent is $14,000, totaling the $42,000 increase.
Example 2: Successive annual depreciation
Scenario. A value of $500,000 declines 8% in each of two successive years.
- Year 1 value = $500,000 x 0.92 = $460,000.
- Year 2 value = $460,000 x 0.92 = $423,200.
Answer. The ending value is $423,200, a total decline of 15.36%, not 16%.
Reasonableness check. The second 8% is applied to the smaller $460,000 balance, so two declines do not simply add when compounded.
Common exam traps
- Dividing the change by the new value instead of the original value
- Adding percentages across periods when the problem describes compounding
- Confusing market depreciation with tax depreciation
- Subtracting an appreciation rate instead of adding it to the one-factor
Original practice questions with detailed explanations
These original instructional questions map to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Write the setup before opening the explanation.
Question 1A home bought for $320,000 sells three years later for $368,000. What is the total percentage of appreciation?
- A. 5.0%
- B. 13.0%
- C. 15.0%
- D. 115.0%
Show answer and explanation →
Answer: C. 15.0%
The $48,000 gain divided by the $320,000 original value is 0.15, or 15%. 13.0% comes from dividing by the $368,000 new value instead of the original. 5.0% splits the gain across the three years, but the question asks for the total.
Question 2A $400,000 property loses 5% of its value in each of two successive years, with each year's loss applied to the prior year's value. What is the value at the end of year two?
- A. $360,000
- B. $361,000
- C. $380,000
- D. $441,000
Show answer and explanation →
Answer: B. $361,000
$400,000 x 0.95 = $380,000, and $380,000 x 0.95 = $361,000. $360,000 adds the two losses into a single 10%, which ignores that the second 5% applies to the smaller balance. $380,000 stops after the first year.
Question 3After appreciating 20%, a property is worth $300,000. What was its original value?
- A. $240,000
- B. $250,000
- C. $360,000
- D. $375,000
Show answer and explanation →
Answer: B. $250,000
New value = original x 1.20, so original = $300,000 / 1.20 = $250,000. $240,000 takes 20% off the new value, but the 20% was measured on the smaller original. $375,000 divides by 0.80, a depreciation factor, instead of 1.20.
Ready to move on?
You have this calculation down when all of these are true.
- I identify the original value as the percentage base.
- I can solve for the dollar change, rate, original value, or new value.
- I distinguish one-time change from compounded change.
- I separate market depreciation from tax depreciation.
- I can reverse-check the result by applying the rate to the original value.
Recommended next lesson
Continue with Georgia Real Estate Transfer-Tax Calculation. Next, the Georgia transfer tax turns a sale price into a tax with its own base, a $1 charge for the first $1,000, and a round-up rule for each extra $100, a step beyond the plain percentages practiced here.
Return to the complete calculation hub, formula sheet, or mixed math drill.