Olivia is 18 and would like to buy a house when she is 30. What is the discount factor for today's prices if the housing values increase 8% per year

The correct option is 39.7%

Step-by-step explanation:

According to data given:

Olivia is 18 and would like to buy a house when she is 30.

it mean n=30-18=12

we have been asked to find the discount factor for today's prices if the housing values increase 8% per year?

It means r=0.08, Annual / Compounding.

As we know that

A=p (1+r) ^{nt}

Let current price be 100, then the future price will be

A=100 (1+0.08) ^{12*1}=100 (1.08) ^{12}/ / / / A=100*2.51817=251.817/ / / /

Hence the discount factor is = / frac{100}{251.817} * 100=39.7 Percent

Hence, the correct option is 39.7%.