Question

You plan to buy a house today for $220,000. if the real estate in your area is expected to increase in value by 2% each year, what will be the approximate value of your house in 7 years.

Answer 1

The multiplier each year is 1.02, so the multiplier for 7 years is 1.02^7.

220,000*1.02^7 ≈ 252,700

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4 significant figures is usually good enough for most real-world problems. (Unless you're counting pennies on your billion-dollar investment.)