Question

The formula (S = C(1 + r)^t) models inflation, where (C) is the value today, (r) is the annual inflation rate (in decimal form), and (S) is the inflated value (t) years from now. If the inflation rate is 7%, use the formula to find out how much a house now worth ​$99,000 will be worth in 6 years. Round your answer to the nearest dollar.

A. $125,960
B. $114,920
C. $107,164
D. $134,585

Answer 1

To calculate the inflated value of a house after 6 years with an inflation rate of 7%, use the formula S = C(1 + r)^t. The house will be worth approximately A) $125,960 in 6 years.

Step-by-step explanation:

To calculate the inflated value of a house after 6 years with an inflation rate of 7%, we can use the formula S = C(1 + r)^t. In this case, the value today (C) is $99,000, the inflation rate (r) is 0.07, and the time (t) is 6 years.

Plugging in these values, we get S = $99,000(1 + 0.07)^6. Evaluating this expression, we get S ≈ $125,960.

Therefore, the house will be worth approximately A)$125,960 in 6 years.