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If an average home in your town currently costs $350,000, and house prices are expected to grow at an average rate of 3 percent per year, what will an average house cost in "5" years?

Multiple Choice

$405,745.93

$402,500.00

$405,168.75

$507,500.00

Respuesta :

TomShelby

Answer:

$405,745.93

Explanation:

We solve using the formula for the future value of a lump sum:

[tex]Principal \: (1+ r)^{time} = Amount[/tex]

Principal 350,000.00

time 5.00 years

rate 3% = 3/100 = 0.03

[tex]350000 \: (1+ 0.03)^{5} = Amount[/tex]

Amount 405,745.93

Is always important to express rate and time in the same metric as we are working with yars the rate should be annual

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