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14 June, 09:39

Emily would like to buy a house that is currently on the market at $175,000, but cannot afford it right now. However, she thinks that she would be able to buy it after 3 years. If the expected inflation rate as applied to the price of this house is 5% per year, what is its expected price after three years?

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  1. 14 June, 09:49
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    The expected price after 3 years is $202584.38

    Explanation:

    Future Value = Cashflow * (1+i) ^n

    FV = 175000 * (1.05) ^3

    FV = $202584.38
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