Question

WORTH 15 POINTS 15) The Feldmans bought their first house for $20,000. Over the years they moved three times into bigger and bigger houses. Now, 37 years later, they are ready to retire and want a smaller house like the first one they bought. If inflation in property values has averaged 3.7% per year during that time, how much will such a house cost them now? (Round your answer to the nearest dollar.) Show your work!!​

Answer 1

First, find the total inflation over the past 37 years: 37 years * 3.7%/year = 136.9 %. Then just multiply the original cost by the inflation and add the original cost so: ($20,000 * 1.369) + $20,000 = $47,380.