Question

the formula S=C(1+r)t 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 3%, how much will a house now worth $123,000 be worth in 23 years? round your answer to the nearest dollar

Answer 1

The house worth in 23 years is $ 242751

Solution:

The formula that models inflation is given as:

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

Where,

C = the value today

r - annual inflation rate in decimal form

t = number of years from now

Given that,

C = $ 123, 000

$r = 3 \% = \frac{3}{100} = 0.03$

t = 23 years

Substituting the values in formula,

$S = 123000(1+0.03)^{23}\\\\S = 123000(1.03)^{23}\\\\S = 123000 \times 1.9735\\\\S = 242751.14 \approx 242751$

Thus the house worth in 23 years is $ 242751