Question

The formula S= C(1+r) t models inflation where C= the value today r= the annual inflation rate (in decimal form) and S= the inflated value t years from now. If the inflation rate is 2% how much will a house now worh $133,000 be worth in 16 years Round answer to nearest dollor

The house will be worth $?

Answer 1

To calculate the future value of the house, you can use the given formula:

\[ S = C \times (1 + r)^t \]

Where:
- \( C = $133,000 \) (current value of the house)
- \( r = 0.02 \) (2% inflation rate in decimal form)
- \( t = 16 \) years

Substitute these values into the formula and calculate:

\[ S = 133,000 \times (1 + 0.02)^{16} \]


\[ S = 133,000 \times (1 + 0.02)^{16} \]

\[ S \approx 133,000 \times (1.02)^{16} \]

\[ S \approx 133,000 \times 1.359 \]

\[ S \approx 180,987 \]

Therefore, the house will be worth approximately $180,987 in 16 years, rounding to the nearest dollar.