Question

The formula S=C(1 + r) models inflation, where C= the value today, r= the annual inflation rate (in decimal form), and S= the inflated value t years from now. If the inflation rate is 2%, how much will a house now worth 88,000 be worth in 13 years? Round your answer to the nearest dollar.

Answer 1

I'm pretty sure the formula is:

`S = C(1+r)^t`

So, this is just an easy plug and chug problem (plug in numbers):

`S = 88000(1+0.02)^(13) = 113837.38`

So, the house will be worth $113,837 in 13 years from now (rounded to the nearest dollar).