Question

If an average home in your town currently costs $250,000, and house prices are expected to grow at an average rate of 3 percent per year, what will a house cost in eight years?

Answer 1

Answer:  $316,692.52.

Explanation:

Given that:

Present Value (PV)= $250,000

Time period (t)= 8 years

Interest rate (r ) = 3% per annum

Future value:

FV = $PV(1 + r)^{t}$

    = $250,000(1 + 0.03)^{8}$

   = $316,692.52

The future value is $316,692.52.