document.write( "Question 605680: Find the cost of a home in 20 years, assuming an annual inflation rate of 2%, if the present value of the house is $260,000. (Round your answer to the nearest cent.)
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Algebra.Com's Answer #381779 by mathie123(224) $\"\"$ $\"About$

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Okay, we will first take a look at the first few years and then get our formula (and once you know the formula for these types of questions it will be a matter of putting the numbers in the formula after). \r
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\n" ); document.write( "\n" ); document.write( "If my house costs 260 000 and the inflation rate is 2%/year this means that next year my house will cost 260 000+260 000(0.02)=260 000 (1.02)
\n" ); document.write( "Similarily, for the year after, it will cost 2% more than 260 000(1.02)
\n" ); document.write( "This means it will cost 260 000(1.02)(1.02).
\n" ); document.write( "We can go on and on but you will see that you will get
\n" ); document.write( " $\"260000%281.02%29%5Et\"$ where t is the number of years that have gone by .
\n" ); document.write( "So we can now plug in t=20 into the above formula, use our calculator and get a value (I will leave this to you, hopefully you get a value that is larger than 260 000 seeing as the price is going upwards each year). \r
\n" ); document.write( "\n" ); document.write( "Hopefully this helps a bit:) \n" ); document.write( "

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